China’s industrial profit growth weakest since December 2016

According to data released today, China’s industrial profit growth has declined to its lowest level in 21 months. Industrial profits at large scale Chinese companies rose by 3.1 percent y/y in March, much slower than 10.8 percent reading in February and compared to 2017, when profits grew by 21 percent, the fastest pace of growth in almost six years. Softer profits growth in manufacturing (8.2 percent YTD) and ferrous metal producers and steelmakers, which saw profits decline by 39.8 percent weighed on the headline reading.

It is not clear at this point, whether this decline is a cyclical phenomenon or the trend is here to continue. Nevertheless, it is important to note that the decline comes amid increased trade friction between the United States and China. The U.S. has taken a tough stance on China’s alleged malpractices by taking actions using tariffs, antidumping laws, and countervailing duties.