China's industrial profits faced a setback in March and showed signs of slowing growth for the quarter, according to official data released by the National Bureau of Statistics (NBS). The figures, which revealed a 3.5% year-on-year decline in profits for March, cast doubt on the strength of the economic recovery in the world's second-largest economy. Cumulative profits of China's industrial firms increased by 4.3% to 1.5 trillion yuan ($207.0 billion) in the first quarter compared to the same period last year, marking a deceleration from the robust 10.2% rise recorded in the first two months of the year. This slowdown in profit growth, particularly in the manufacturing sector, raises concerns about the sustainability of China's economic rebound. Despite a surge in profits for high-tech manufacturing industries, including a notable 29.1% rise in profits during the first quarter, the overall picture remains mixed. The automobile manufacturing sector saw a significant 32.0% increase in profits in January-March, reflecting continued demand for electric vehicles (EVs) in the world's largest auto market. However, the outlook for certain industries is less optimistic. Chinese electric vehicle battery company CATL reported a rebound in profits for the first quarter but faced declining revenue for the second consecutive quarter amid slowing demand and heightened competition. This underscores the challenges facing companies in navigating the shifting economic landscape. The slowdown in industrial profit growth comes at a time when China's economy is facing increasing uncertainty, with risks to public finances prompting a negative outlook from rating agency Fitch. While policies aimed at supporting manufacturing enterprises, such as equipment renewal initiatives, may offer some relief, the focus should be on stimulating demand rather than solely addressing supply-side issues. Overall, the latest industrial profit data suggests that China's economic recovery may be losing momentum, raising questions about the effectiveness of current policies in sustaining growth. As policymakers grapple with these challenges, the need for targeted measures to bolster domestic demand and support struggling industries becomes increasingly apparent. In the absence of such measures, the road to full economic recovery for China may prove to be more challenging than anticipated.