China's industrial profits maintain growth momentum in April despite trade tensions
By Joe Cash and Shi Bu
BEIJING (Reuters) -China's industrial profits picked up pace in April, official data showed on Tuesday, giving policymakers cause for optimism that recent stimulus efforts are helping to keep the economy afloat despite trade tensions with the United States.
U.S. President Donald Trump's decision to single China out in his global trade war has stirred significant worries about an economy that has been reliant on an export-led recovery to drive momentum in the face of weak domestic demand and deflationary pressures.
Industrial profits rose 1.4% year-on-year in the January-April period, according to data released by the National Bureau of Statistics (NBS). This compared with 0.8% growth over the first quarter.
In April alone, profits rose 3.0%, versus a 2.6% rise a month prior.
"China's industrial policy priorities look to be working well," said Dan Wang, Eurasia Group's China director. "Commodities involved in new energy and new materials supply chains are doing well, as are those in high-end manufacturing."
Policymakers have since September been drip-feeding stimulus measures in a bid to boost domestic demand and investor confidence, with the latest round in early May including interest rate cuts and a major liquidity injection.
Moody's on Monday maintained its negative outlook on China, citing unease over tensions with major trade partners could have a lasting impact on its credit profile, but acknowledged that government policy had addressed the credit ratings agency's previous concerns about the health of state-owned firms and local government debt, which prompted a downgrade in late 2023.
Profits at state-owned enterprises fell 4.4% over the first four months, the NBS data showed, while private sector companies and foreign firms enjoyed growth of 4.3% and 2.5%, respectively.
Industrial profit numbers cover firms with annual revenue of at least 20 million yuan from their main operations.
"The foundation for stable profit growth still needs to be strengthened," Yu Weining, an NBS statistician, said in a note accompanying the data.
"Challenges remain: global uncertainties, insufficient demand and falling prices continue to weigh on the recovery."
Separate data released over the course of April - as the U.S. and China ramped up tit-for-tat tariffs - painted a mixed picture for the economy, with better-than-expected exports offset by slowing growth in factory output and retail sales and a slump in bank lending.
While the world's top two economies reached a truce during talks in Geneva earlier this month - with the U.S. and China unwinding most of the tariffs imposed on each other's goods since early April - analysts warn the arrangement may not hold and could still derail the Chinese economy.
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