China's industrial profits fall in April over cut in value-added tax: NBS

Source:Global Times Published: 2019/5/27 21:03:41

Industrial profits fall in April over cut in value-added tax: NBS

Workers at a rubber factory in Dongguan, South China's Guangdong Province in Feburary Photo: Shen Weiduo/GT

The profits of China's major industrial enterprises fell in April due to a value-added tax (VAT) rate reduction that caused the front-loading of demand for some items in March, official data showed Monday.

In April, profits totaled 515.4 billion yuan ($74.7 billion), down 3.7 percent year-on-year, and total profits from January to April dropped by 3.4 percent year-on-year. 

However, from the perspective of average growth rates, profits in March and April increased by 5 percent on average, according to the National Bureau of Statistics (NBS).

"Beside the VAT rate reduction, the increasing costs of industrial companies could also affect their profit margins to some extent," Ye Qing, professor at Zhongnan University of Economics and Law, told the Global Times on Monday.

Production and operating activities also have been hit by the China-US trade war, Ye noted and said that "The effects of central government economic countercyclical methods have started to kick in, even though industrial profits still declined in recent months." 

From January to April, nearly 70 percent of the sectors found that profit increased year-on-year, according to Zhu. Profits have been recovering in major industries such as steel, oil refining, oil extraction and chemicals. 

Ye forecast that industrial profits would continue to pick up due to the effects of government tax and fee cuts, such as the reduction of social insurance contributions and decreasing rates for electricity.

The People's Bank of China, China's central bank, announced that it will lower the reserve requirement ratio for small and medium-sized banks from May 15, according to a report from the Xinhua News Agency.

Newspaper headline: Industrial profits fall in April over cut in value-added tax: NBS

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