China's profits are rising due to increased overseas demand


Profits at China's industrial companies rose in April as exports returned to growth in the same month, giving the economy a boost. It is reported Bloomberg.

According to data published by the National Bureau of Statistics of the People's Republic of China, the industrial profits of major Chinese companies increased by 4% in April compared to a year earlier. April's rise reverses a decline in March that ended seven months of growth.

Chinese policymakers are counting on the country's industrial producers to offset weak domestic demand and help the economy meet this year's growth target of about 5 percent. But weaknesses in the world's second-largest economy are holding back activity.

In April, growth in consumer spending unexpectedly fell to the slowest pace since 2022, while key indicators for the real estate sector worsened across the board. Factory prices remained deflated, as they have been since late 2022, and the producer price index fell 2,5% in April from a year earlier.

All this forced the authorities to support the domestic market with more fiscal and monetary stimulus.

Economists expect the central bank to cut interest rates this year, and the Chinese government has announced a program to boost consumer spending on cars and home appliances, offering subsidies to replace older models. Earlier this month, the government also announced a broad rescue package for the property sector, although analysts doubt the measures will be enough to end a years-long property slump.

China's disputes over industrial production with the US and the EU

China's large industrial output has been a source of tension with the United States and Europe, which have criticized Beijing for flooding the world market with cheap goods, particularly in emerging energy sectors.

The trade spat looks set to escalate as China vowed to take tough action against new tariffs imposed by US President Joe Biden's administration and hinted at 25% tariffs on cars that will hit European and US carmakers.

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