Workers assemble new-energy vehicles in Chery's assembly workshop in Wuhu city, East China's Anhui Province, on May 23, 2024. In recent years, Wuhu has prioritized this industry in its green transformation and industrial upgrading, drawing more than 300 companies across industries. Photo: VCG

 
Industrial profits in China returned to positive territory in April, while gains over the first four months of 2024 remained steady as policies taken to support the economy showed an effect, the National Bureau of Statistics (NBS) announced on Monday.

The figures add to other important economic indicators in April that showed a moderate improvement from March, highlighting a continuous recovery of the world's second-largest economy. 

Analysts said that the Chinese economy will gain pace in the second quarter, with GDP expected to grow about 5.5 percent, an increase from 5.3 percent in the first quarter, as stimulus measures kick in. They also expect more proactive macro policies during the remainder of the year. 

In April, profits of industrial enterprises above the designated size rose 4.0 percent year-on-year, a significant improvement from the 3.5 percent decline in March, as pro-growth policies took effect and market demand picked up, Yu Weining, an official from the NBS, said on Monday. 

Industrial profits of these companies rose 4.3 percent in the first four months, unchanged from the first quarter and maintaining steady growth, said Yu.

From January to April, more than 70 percent of all industries' profits rose year-on-year.

"The improvement of industrial profits in April reflects the recovery of market demand, macro policy support and the low base effect," Zhou Maohua, an economist at China Everbright Bank, told the Global Times on Monday.

Supportive macro policies to reduce burdens on the manufacturing industry and promote industry upgrading contributed to the overall improvement of the manufacturing sector, Zhou said.

The effects of large-scale equipment upgrades are emerging, contributing to the rapid growth of equipment makers' profits. From January to April, their profits increased by 16.3 percent year-on-year, outpacing the overall industrial profit growth rate by 12.0 percentage points as the largest contributor to industrial profit growth, the NBS said.

From January to April, the profits of consumer goods makers rose 12.0 percent year-on-year, 1.1 percentage points faster than that in the first quarter, due to improved market demand and better export situation.

The steady recovery and growth of industrial enterprises' profits are key indicators of the thriving manufacturing industry in China, instilling optimism for continued growth in the sector, Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Monday.

The industrial profits added to a series of encouraging economic indicators in April, with a steady improvement of industrial conditions, exports, employment and prices, paving the way for accelerated economic growth in the second quarter. 

"The optimistic view is that GDP growth will reach 5-5.5 percent in the second quarter," Cong said.

The second quarter is a critical time for GDP growth. Large-scale equipment renewals and consumer product trade-in policies will be key drivers of GDP expansion in this period, Cong said. 

Lian Ping, president of the China Chief Economist Forum, told the Global Times on Monday that second-quarter GDP growth will be about 5.5 percent and full-year growth will hit about 5.3 percent, due to the more proactive macro policies. 

Fiscal policy support is moving in the right direction and is positive, including the issuance of 1 trillion yuan ($138 billion) in ultra-long special treasury bonds and increasing support for real estate, Lian said.

China on Friday issued this year's second batch of these bonds totaling 40 billion yuan with an interest rate of 2.49 percent.
 
The reserve requirement ratio may be reduced further, along with lower market interest rates in the second quarter, Lian added.