BEIJING Profits of Chinese industrial firms grew more than 20 percent in the first quarter from the same period a year ago, a senior official from the country's top economic planner was quoted as saying on Wednesday.
While still robust, the figure could suggest a marked earnings slowdown in March from the first two months of 2017, when profits surged almost 32 percent, the fastest pace in nearly 6 years.
The comments from Ning Jizhe, vice chairman at the National Development and Reform Commission (NDRC), came a day ahead of the official data release.
Ning told the People's Daily in an interview that market watchers should not be too sensitive to minor fluctuations in China's economic growth rate and should pay more attention to the quality of growth instead.
"We can't have zero growth, or too low of a growth rate, but the growth rate is not omnipotent, nor is the GDP," Ning said.
Strong first-quarter profits, together with an increase of 14.1 percent in fiscal revenue, has set "an excellent foundation" for improved growth quality in 2017, he said.
Echoing bullish comments from the finance minister and the central bank chief, Ning said China is set to achieve its annual growth target, even though it has so far reported data for only the first three months of the year.
But Ning also cautioned that the problem of excess capacity in sectors such as steel and coal has not been fundamentally resolved despite more efficient utilization rates, adding it will take some time to sort out.
The government made some progress in shutting more inefficient capacity last year, but a senior official of the China Iron and Steel Association (CISA) called on Tuesday for further cuts, saying the sector remains saturated despite increased profits in the first quarter.
China's government has lowered its 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.
Barring a major shock, stronger-than-expected growth of 6.9 percent in the first quarter is expected to give the economy enough of a tailwind to meet the full-year target even if activity cools a bit later in the year, as many analysts predict.
China's industrial firms have been enjoying their best profits in years in recent months as a construction boom and government-mandated cuts in excess capacity led to sharp increases in prices of raw materials such as iron ore and coal.
But most economists expect price gains will soon start to slow as government stimulus fades and a red-hot property market cools.
(Reporting by Yawen Chen and Nicholas Heath; Editing by Kim Coghill)