Profits at Chinese industrial companies rose 4% in April from a year earlier

Profits at China's industrial enterprises rose 4 percent in April from a year earlier, reversing a 3.5 percent decline in March.

Data released by China's National Bureau of Statistics on Monday also showed that total profits of industrial enterprises above designated size rose 4.3 per cent in the first four months of the year from a year earlier.

Yu Weining, statistigrapher of the Industrial Department of the National Bureau of Statistics of China, explained that in April this year, with the implementation of the macro portfolio policy, the effect continued to emerge, market demand continued to pick up, industrial production picked up for the better, and the efficiency of industrial enterprises above scale continued to recover.

However, he also pointed out that domestic effective demand is still insufficient, the external environment is still complex and severe, and the foundation for the recovery of industrial enterprises still needs to be consolidated.

In terms of categories, the mining industry was affected by lower coal prices and lower output, and its profit fell by 18.6 percent year-on-year. The profit of the manufacturing sector increased by 8%, with the growth rate accelerating by 0.1 percentage points. The profit of electricity, heat, gas and water production and supply industry increased by 36.9%, continuing the rapid growth trend.

Data also show that more than 70% of the industry profits to achieve growth. Of the 41 industrial groups, 31 saw year-on-year profit growth. The profit of the equipment manufacturing industry increased by 16.3% year-on-year, driving the industrial profit growth of 4.7 percentage points, which is the largest contribution to the industry sector.

The global cyclical boom in technology products such as chips and the Chinese government's push for companies to "trade in old equipment" may have supported a rebound in industrial profits in April, Bloomberg analysis said. Strong overseas demand for manufactured goods is also boosting earnings for manufacturers of goods such as clothing and furniture.

The latest data is another sign that the manufacturing sector is regaining its footing, but it may reflect support from exports and government investment rather than a broader recovery in private sector demand, raising concerns about the sustainability of profit growth.