China’s industrial profits rise 1.1%, bucking trend, Latest Business News - The New Paper

China’s industrial profits rise 1.1%, bucking trend

This article is more than 12 months old

BEIJING : Bolstered by improving sales and better margins, profits for China's industrial companies rose last month, bucking a months-long downtrend.

But analysts are unsure if the modest gains can last.

Profits rose 1.1 per cent last month from a year earlier to 565.6 billion yuan (S$111 billion), according to data released by the Chinese National Bureau of Statistics (NBS) yesterday, following a 3.7 per cent fall in April.

In the first five months, industrial companies earned profits of 2.38 trillion yuan, down 2.3 per cent from a year earlier, compared with a 3.4 per cent drop in January-April.

The uptick last month was driven by quicker sales and slower increases in corporate costs, NBS statistician Zhu Hong said in a statement accompanying the data.

Moreover, profits in high-tech manufacturing and emerging industries both turned positive last month after declining the month before.

"The modest pick-up in high-tech industry might suggest the effect of value-added tax (VAT) cuts is kicking in," said Dr Lu Ting, chief China economist at Nomura.

But Dr Lu noted the rebound was still relatively weak and was likely to be short-lived as the trade war drags on.

While China's overall tech industry profits rose last month, earnings for telecommunications and electronic equipment manufacturers, which are more vulnerable to US tariffs than other product classes, declined 13 per cent in January-May.- REUTERS