Based on April 2011 data, profit growth slowed last month to 3.4 per cent from 4.9 per cent in March, said Yu Jianxun, an official in the agency's Industrial Department.

For the year to April, total profit reported by the sector rose 11.4 per cent to 1.6 trillion yuan (HK$2 trillion), compared with a 12.1 per cent growth rate in the first quarter.

Tim Condon of investment bank ING said profit growth would be affected by the government's control of the "three excesses": house price inflation, total credit, and local government borrowing.

The HSBC flash purchasing managers' index, which fell to a seven-month low this month, signalled weakness in manufacturing as domestic and external orders softened.

A surge in the yuan may complicate companies' efforts to increase profits since a stronger local currency reduces the cost of imported raw materials but makes exports less competitive.

The yuan rose to a 19-year high against the US dollar yesterday, after the central bank set the fixing rate at a record 6.1811 per dollar. Beijing has allowed the yuan to strengthen over the past month.

Doing so may reduce criticism from trade partners on the country's currency policy and lay a sound foundation for a meeting between President Xi Jinping and US President Barack Obama that is scheduled for early next month in California.

Profit growth has moved in tandem with industrial production, which gained 9.4 per cent in the first four months, a fraction slower than the 9.5 per cent growth in the first quarter.

Still, the impact of the yuan's appreciation on manufacturers appears to have been limited so far.

In the year to April, industrial companies' profits climbed to 437 billion yuan.