Profits at China's major industrial companies rose slower in March, damped by excessive hikes in raw materials prices and easing profit growth in coal, oil and steel industries, the National Bureau of Statistics said yesterday.
Industrial profits jumped 23.8 percent year on year last month to 688.7 billion yuan (.9 billion), down from 31.5 percent in January and February combined but faster than the 8.5 percent increase in March 2016, the official data showed.
He Ping, a bureau analyst, said profit growth remained relatively strong in March, and the slowdown marked a return to normal conditions.
Prices of raw materials rose faster than prices of products sold by the companies, eating into their profits, He said.
The oil, coal, chemicals and steel industries suffered the most from the price changes and a high profit base last year, and they contributed 8.5 percentage points to the slowdown in overall industrial profit growth, He said.
The slower profit growth echoed market expectations as analysts have expected the rise in profits and producer price inflation to cool.
The bureau, however, said industrial sectors saw positive changes as profit rose faster in consumer goods and equipment manufacturers, indicating improved structure.
Industrial companies also saw their burden of debt ease in March as the debt-to-asset ratio fell by 0.7 percentage points year on year to 56.2 percent.
Strong first-quarter profits, together with an increase of 14.1 percent in fiscal revenue, have set "an excellent foundation" for improved growth quality in 2017, Ning Jizhe, vice chairman of the National Development and Reform Commission, told the People's Daily in an interview on Wednesday.
China's government has lowered its economic growth target to around 6.5 percent this year from a range of 6.5-7 percent last year and an actual rate of 6.7 percent.
First-quarter growth came in at a faster-than-expected 6.9 percent, which could give the economy enough of a tailwind to hit the full-year target, analysts said.