China's industrial profits rise in March, up 13.9%

BEIJING (Reuters) – Profits from China's industrial enterprises rose in March. They rebounded after four months of contraction, adding to the optimism that the world's second-largest economy is starting to stabilize.

A return to profit could add to the debate over additional stimulus measures that Beijing needs to inject into the economy if it recovers.

Beijing and Washington seem to be moving towards a trade deal, but investors worry that a sharp slowdown in China will affect the entire global economy.

Profits in March rose 13.9 percent year-over-year to 589.52 billion yuan (87.62 billion US dollars), the National Bureau of Statistics (NBS) said on Saturday. drop of 14% in the first two months.

This is the largest monthly increase since July 2018.

For the first quarter of the year, profits earned by industrial enterprises fell 3.3 percent to 1.3 trillion yuan from a year earlier, according to the NBS.

March's growth comes mainly from an acceleration in production and sales, as well as a recovery in profits in major industrial sectors, said Zhu Hong of the statistics bureau in a statement accompanying the data.

The rise in industrial profits has eased concerns over the slowdown in the Chinese economy, which has slowed in the past year, penalized by a bitter trade dispute with the United States and a campaign to reduce the risks badociated with it. to debt higher financing costs for businesses.

The government has stepped up stimulus measures this year by announcing billions of dollars in additional tax cuts and infrastructure spending. China's industrial production growth grew at the fastest pace since July 2014 in March, while gross domestic product grew by 6.4%, exceeding expectations.

At the same time, producer prices also rose for the first time in March, helped by rising world commodity prices and government efforts to boost domestic demand.

However, the question of whether the adjustments will be sustainable remains worrying, as the gains could be due to seasonal factors – such as the resumption of construction after the Lunar New Year – instead of a rebound in wider demand .

Most major Chinese steelmakers reported lower earnings in the first quarter due to higher commodity prices and weak demand.

The country's largest publicly traded steel company, Baoshan Iron & Steel Co Ltd, reported its first negative growth on Wednesday since 2015. Jiangsu Shagang Co Ltd, China's largest privately owned steel mill, also announced a 60.62 % of first quarter net income.

Upstream sectors such as mining and metallurgical producers and state-owned enterprises still dominate profit gains. Earnings from oil and natural gas extraction rose 10.3% in the beginning, compared to a 5.7% decline between January and February.

The profits of Chinese state-owned industrial enterprises, however, fell by 13.4 percent on an annual basis for the first quarter, according to the statistics bureau.

Commitments by industrial companies rose 6.5 percent year-on-year at the end of March, the NBS said.

The data includes companies with annual revenues of more than 20 million yuan from their main operations.