Chinese industrial profits rebound strongly in April

China’s April industrial profits recovered strongly, rising 21.9 percent year-on-year from March’s 3.1 percent, the most solid rate in six months. This was because of increased output as seen by stronger industrial production in April, higher producer prices and improved profit margins particularly in the steel, chemical and auto industries.

In the initial four months of the year, industrial profits rose 15 percent to CNY2.1 trillion but it is lower than the 24 percent gain for the same period last year. This might indicate towards resilience in the domestic economy and ease fears of a sharp deceleration after the industrial profit numbers of late.

However, the latest rebound should not be read too much into, noted Commerzbank in a research report. China is still mired in overcapacity, curtails to production as it tackles pollution, and is in the midst of ongoing trade talks with the U.S. The bigger picture continues to be one of stable to slower growth as the nation addresses the imbalances in the economy, added Commerzbank.

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