China's April Industrial Profits Fall as Trade Standoff Worsens

(Bloomberg) -- The profits of China’s industrial companies fell in April even before President Donald Trump raised additional tariffs on imports from China, underscoring the fragility of the world’s second-largest economy.

• Industrial firms’ profits declined 3.7% in April from a year earlier, the National Bureau of Statistics said in a statement on Monday. That was the biggest drop since 2015, although revisions to the data mean that economists have raised doubts about the reliability of the release.

Key Insights

• The drop in profits was mainly due to the comparison to high profits a year ago and also to companies trying to take advantage of a tax change on April 1, the NBS said. Companies bought industrial goods in March ahead of the tax cut and then cut back on purchases in April, lowering profits
• State-owned enterprises’ profits fell 9.7% in the first four months of 2019, while private businesses’ profits increased 4.1% during the same period
• At the end of April, the corporate debt-to-asset ratio dropped by 0.5 percentage points to 56.8% compared with a year ago. The debt ratio of SOEs decreased by 1.1 percentage points to 58.4%

©2019 Bloomberg L.P.