China April industrial profits up 14% but slowing pace stokes economy worries

China April industrial profits up 14% but slowing pace stokes economy worries

Beijing: Profits of Chinese industrial enterprises rose 14% in April compared to the previous year, showed Saturday to official data, slowing the pace of March and adding to fears that have lost the second world economy.

Profits in April reached ¥ 572.78 billion (83.59 billion yuan), according to the National Bureau of Statistics (NBS) on its website.

Profits increased by 23.8% in March compared to the same month last year. During the first four months of the year, profit reached $ 2.28 trillion, an increase of 24.4% compared to the same period of the previous year and compared to a growth of 28.3% in the first quarter.

After a jump in the year, industrial profits should improve in April as iron ore, steel and other commodity prices fell sharply and factory output growth, investment and retail sales declined.

A boom in construction, fueled by a search for government infrastructure and housing market is heated, pushed the demand and prices of steel materials to cement, which gave the Chinese industries “smoke” and more more Cash flow to eliminate a mountain of debt.

“The slow growth of industrial profits in China is reasonable given the rapid growth earlier this year,” said the head of the statistical office, He Ping, in a statement accompanying the data, adding that earnings being solid .

The deceleration of industrial profits can be attributed to the fall in prices of finished products and raw material costs, as well as slow earnings growth in sectors such as steel, automobiles and chemicals.

If the purchase price of the raw material exceeds the price of the finished products of the factory, which will result in higher manufacturing costs, especially for the manufacturing industries, he said, adding that another issue requiring close supervision is whether they increase The costs of financing for companies.

Moody’s Investor Service has downgraded China’s credit ratings on Wednesday for the first time in nearly 30 years, saying it expects the financial strength of the economy to collapse in the coming years as growth slows and debt continues to rise .

After an increase of more than 6.9% in the first quarter, China’s economic growth should normally cool during the rest of the year, as the impact of stimulus previously begins to fade and as the costs of the loans are Increasing in response to forms of financing a higher-risk offensive.

But, with the exception of major crises, most analysts think the economy has enough momentum to reach Beijing’s growth target of 6.5% for the full year.

“We are now less pessimistic about short-term growth than we were two months ago,” Nomura economists said in a note on May 25.

Nomura, which maintained its GDP growth forecast of 6.7% for 2017 and 6.2% for 2018, still believes that real estate investments are so slow that authorities are taking steps to heat up hot prices but now They believe that the decline will be more moderate and will take more time than expected.

In addition, the government must keep the economic and financial conditions largely stable in a key reorganization of political leadership later this year.

Passive industrial firms rose 6.7% year-on-year at the end of April, according to the statistics office.

Earnings from China’s state-owned enterprises rose 58.7% to $ 514.86 billion ¥ Jan-April, up from 70.5% in the first quarter.

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