Profits earned by China's industrial firms in January and February rose 16.1 percent. But the double-digit growth fell short of last year's 21% average growth. TRACEY CHANG tells us why. 

Profits for China's industrial firms picked up pace in the first two months of the year, reaching almost 970 billion yuan. That's up 16.1 percent from the previous year. Sectors that registered the highest growth include non-metal mineral products, power companies and pharmaceuticals. Their profits were up 57%, 38% and 37% respectively. Analysts say the rise in profits is largely due to falling costs and quicker product sales, which offset weaker producer prices.

Data from the statistics bureau also shows that upstream raw material firms raked in high profits, while down stream firms are having a hard time raising their profit margins. Despite strong growth, the number fell short of the average growth rate of 21% seen during last year. 2017 saw industrial profits surge thanks to a construction boom boosting prices of building materials. Analsyts say slowing earnings growth could deter investment and put further pressure on China's stock markets amid looming fears of a trade war with the United States. It could also complicate the central government's efforts to reduce corporate debt.

ZHANG HANGYAN, RESEARCHER INSTITUTE OF INDUSTRIAL ECONOMICS, CASS "There is not a jump in industrial firms' manufacturing activities. Besides, PPI is also on a downward trend. In my opinion, the growth in overall industrial profits this year will scale back slightly."

Tracey Chang, CGTN.