PROFITS at China’s industrial firms picked up their paces in the first two months of the year from December but still lagged for the whole of 2017, backing expectations that the world’s second-biggest economy is set to cool as the government clamps down on debt risks.

Industrial companies with annual revenue of more than 20 million yuan (US$3.2 million) reported profits of 969 billion yuan in the first two months, a 16.1-percent increase from a year earlier, the National Bureau of Statistics said yesterday.

That compared with a 10.8-percent increase in December, though it lagged the 21-percent jump for 2017 as a whole, the fastest pace since 2011, as a construction boom boosted prices of building materials from steel bars to copper pipes and cement.

ANZ Shanghai-based analyst David Qu said the profit growth rate was “still a good number.”

“We believe it’s highly likely that industrial profits will achieve double-digit growth for the rest of the year despite price slowdown.”

Growth picked up speed from December largely due to quickened sales with continued cost-cutting efforts, offsetting weaker prices, He Ping of the statistics bureau said in a statement along with the data.

Strong global demand also benefited China’s exporters. Mining industry profits rose 42.1 percent from a year earlier in the January-February period, while those for manufacturing were up 12.5 percent.

ANZ’s Qu said he expects energy-related industries to fare well this year, despite increased market volatility as investors brace for tighter liquidity conditions and worries about a Sino-U.S. trade spat.

“While overall growth is expected to be strong, whether individual companies have the ability to float above in a more volatile market is a big question,” he said.

Profits at China’s State-owned industrial firms rose 29.6 percent in the January-February period from the year before, slowing from a 45.1-percent increase in 2017.

Yesterday’s data also showed Chinese industrial firms’ liabilities increased 6 percent year on year by the end of February to 59.6 trillion yuan, compared with a 5.7-percent rise for 2017.

The ratio of liabilities to assets at industrial firms rose to 56.3 percent from 55.5 percent at the end of December. (SD-Agencies)