Profits at large Chinese industrial companies fell by their fastest rate in almost three-and-a-half years in April, adding to anxieties over the health of the world’s second-largest economy.
Data released by China’s statistics bureau on Monday showed that industrial profits slipped by 3.7 per cent year on year during the period, the quickest rate of monthly contraction since December 2015.
The performance was also a major contrast to March, when industrial profits rebounded by 13.9 per cent year on year. For the year to April, industrial profits are down 3.4 per cent compared to a year ago.
The figures are the latest evidence of the slowdown in China’s economy, which comes amid an escalation of trade tensions between the country and the United States. Earlier this month, US president Donald Trump raised tariffs to 25 per cent on $200bn of Chinese goods. Beijing retaliated by increasing levies on about $60bn of US imports.
“We believe China’s industrial profit growth continues to face strong headwinds, especially from weakening domestic demand and the quickly escalating China-US trade conflict,” wrote analysts at Nomura on Monday.
While the Chinese economy grew at a faster pace than forecast in the first quarter compared with the final three months of 2018, analysts have put that down to stimulus efforts by Beijing, including loosening the flow of credit.
Other recent data have hinted at weakness in the economy. For example, retail sales in April grew at their weakest pace since 2003, led by a slowdown in consumer goods and cosmetics sales.