BEIJING (Reuters) – Profits at China’s industrial firms slumped for a sixth straight month in October as demand cooled further amid mounting uncertainties stemming from the United-States.-China trade war.
China and the United States have slapped tariffs on billions of dollars of each other’s goods, hurting manufacturing and casting a shadow on the outlook for global growth.
Industrial profits rose 3.6 percent in October from a year earlier, slowing from September’s 4.1 percent gain, the National Bureau of Statistics (NBS) said on Tuesday.
Total profits for last month were 548 billion yuan (62 billion pounds), it said.
The expansion was the slowest since March as the world’s second-largest economy braced for weaker growth thanks to the trade war plus efforts to rein in financial risks and tackle pollution problems.
The slowdown in earnings was largely due to cooling factory-gate inflation and a high-base effect, statistics bureau official He Ping said in a statement.
Profit growth for China’s industrial firms has been weakening from last year’s strong performance as factory-gate inflation continued to ease on sluggish demand, despite a surprising rebound in industrial output in October.
Chinese iron ore futures tumbled nearly 6 percent and steel prices dropped to the lowest in almost five months on Monday as worries over weaker steel demand fuelled a sell-off, with raw materials coking coal and coal also down sharply.
Despite increasing economic pressure, China’s environment ministry has said the government will not ease its measures to curb air pollution, although cities and regions have been given more leeway in determining individual cuts this year.
To shore up the slowing economy, policymakers have introduced a flurry of credit-easing measures to boost lending to private firms and reduce their tax burdens, while executing plans to reduce systemic financial risks.
Economists at HSBC, in a note last week, said they expect coming tax cuts could be equivalent to 1.6 percent of gross domestic product in 2019, lifting profits and improving business sentiment.
But analysts have warned China’s exports could fall sharply if U.S. President Donald Trump raises tariffs on $200 billion in Chinese imports to 25 percent on Jan. 1.
On Monday, he told the Wall Street Journal it was “highly unlikely” he would accept China’s request to hold off on the increase.
For the first 10 months, profits for China’s industrial firms rose 13.6 percent from a year earlier to 5.5 trillion yuan, versus a 14.7 percent increase in January-September, Tuesday’s data showed.
Profits in January-October totalled 1.67 trillion yuan for state-owned enterprises and 1.41 trillion yuan for private firms.
At the end of October, industrial firms’ liabilities increased 5.9 percent from a year earlier to 63.7 trillion yuan, according to the Statistics Bureau.
(Reporting by Yawen Chen, Min Zhang and Ryan Woo; Editing by Richard Borsuk)