China's industrial profits rise 1.1% in May as sales quicken

China's industrial profits have been faltering for over a year as the economy slows and the US-Sino trade war escalates.

Bolstered by improving sales and better margins, profits for China's industrial companies rose in May, bucking a months-long downtrend.
But analysts are unsure if the modest gains can last. China's industrial profits have been faltering for over a year as the economy slows and the US-Sino trade war escalates, weighing on manufacturing investment and output.
Profits rose 1.1 per cent in May from a year earlier to 565.6 billion yuan ($82.21 billion), according to data released by the National Bureau of Statistics (NBS) on Thursday, following a 3.7 per cent fall in April.
In the first five months, industrial firms earned profits of 2.38 trillion yuan, down 2.3 per cent from a year earlier, compared with a 3.4 per cent drop in January-April.
The uptick in May was driven by quicker sales and slower increases in corporate costs, Zhu Hong of the statistics bureau said in a statement accompanying the data, adding that better margins in equipment manufacturing and the coal sector attributed to the bulk of the increase.
Moreover, profits in high-tech manufacturing and emerging industries both turned positive in May after declining the month before.
"The modest pick-up in high-tech industry might suggest the effect of value-added tax cuts is kicking in," said Lu Ting, chief China economist at Nomura.
Ting noted, however, that the rebound was still relatively weak and was likely to be short-lived as the trade war drags on.
Leaders from both countries will meet in Japan on Saturday to see if they can get trade negotiations back on track after talks broke down in May.
U.S. President Donald Trump said on Wednesday that a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose US tariffs on virtually all remaining Chinese imports if the two countries continue to disagree.