China’s industrial profit growth decelerated for a sixth straight month in October, as the trade war with the United States continued to weigh on the economy.

Industrial profits rose 3.6 per cent last month compared to a year earlier, down from growth of 4.1 per cent in September and the recent high of 21.9 per cent growth in April, according to data from the National Bureau of Statistics.

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Profits increased by 13.6 per cent in the first 10 months compared to the same period last year, slowing from 14.7 per cent growth in the January-September period.

The expansion was led by the steel, oil, building materials and chemical industries, which contributed nearly 76 per cent of the overall industrial profit growth during the January-October period, the statistics bureau said.

Steel industry profits increased by 63.7 per cent in the first 10 months of the year, as steel output hit a record high of 82.55 million tonnes in October, according to government calculations.

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The world’s largest steel producer has loosened its anti-smog campaign in the last few months to help stabilise economic growth, with the Ministry of Ecology and Environment saying it would let steel plants continue production as long as they met emissions standards. Last winter, the government halted production in several industrial sectors in 28 cities during the winter months to reduce pollution.

At state-owned enterprises, industrial profits grew by 20.6 per cent in the first 10 months of the year, down from 23.3 per cent in the first nine months. Private sector profit growth was much slower at 9.3 per cent from January to October. Profit growth at foreign firms slowed only 0.1 percentage point to 5.6 per cent in that period.

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Beijing recently introduced a series of measures to help struggling private sector firms, including

ordering state-owned banks to lend more to small and medium-sized private companies.

Private industrial companies’ debt-to-assets ratio rose to 56.2 per cent at the end of October from 51.4 per cent a year earlier, while the ratio for state-owned industrial enterprises improved to 59.0 per cent from 60.9 per cent.

The downwards trend in industrial profit growth is expected to continue in the coming months “given weakening domestic demand, already high financing costs, rising credit defaults and the escalation in the China-US trade conflict”, economists from Nomura International in Hong Kong led by Lu Ting wrote in a research note.

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