China's economic recovery hit as profit growth wanes
Mainland industrial firms post weaker earnings growth because of overcapacity and waning demand, but consumer retail sales stay firm
Growth in Chinese industrial firms' profits slowed last month, adding to evidence the mainland's economic recovery is losing steam.
Net income rose 5.3 per cent to 464.9 billion yuan (HK$580 billion) from last March, down from a 17.2 per cent pace in the first two months of this year, the National Bureau of Statistics said yesterday.
Profit in the first quarter rose 12.1 per cent to 1.17 trillion yuan, it said. Tax revenue growth for the first quarter also slowed by 4.3 percentage points from the same period last year, the Ministry of Finance said.
The data follows the supreme Politburo Standing Committee meeting on the economy on Thursday, which called for strengthening the mainland's economic growth momentum while guarding against financial risks.
"Profits are only growing in line with sales and with problems of overcapacity and the sluggish global picture. It doesn't bode well for a speedy return to higher profit margins," said Louis Kuijs, chief China economist at Royal Bank of Scotland.
"Heavy industries especially still face destocking and higher costs, but if there is a silver lining, industries catering to the consumer, like textiles, food and beverages, seem to be doing much better," Kuijs said.