BEIJING: Profits at China’s major industrial companies saw their biggest declines in four years last month, official data showed on Monday, the latest sign of weakness in the world’s second-largest economy.
The figures came after a string of poor data showing the slowing pace of the traditional drivers of China’s growth sent shockwaves through markets worldwide.
Profits at a range of large firms declined by almost nine percent last month compared to the same period in 2014, the country’s statistics office said.
The profit falls at a range of companies with annual revenues of more than 20 million yuan were the biggest in about four years, Bloomberg News said.
“Market demand for industrial products was rather weak,” said He Ping, an analyst at China’s National Bureau of Statistics.
Months of declines in China’s stock markets have caused “the boost of return on investment to profit to wane sharply,” He added.
China’s economy expanded 7.3 percent last year, the weakest pace in almost 25 years.
The government has vowed to rebalance the economy away from reliance on exports and government investment towards domestic consumption as a driver of growth.
The industrial profit figures exclude firms in China’s service sector, which analysts say will increase in importance under such a rebalancing.
But Xu Yating, an economist with IHS Global Insight, warned that the dent in industrial profit could broaden to affect consumer goods makers.
“The headline profit growth is unlikely to improve in the short term and the downstream sectors will be affected in the long-run if China’s economic growth continues to slide and drag on domestic consumption,” Xu said in a report.