China's factory activity softened in April, official data showed Tuesday, in the latest sign that the world's second-largest economy remains on uneven footing despite a raft of government stimulus measures.

The Purchasing Managers' Index (PMI), a key gauge of factory conditions, came in at 50.1 for the month, down from 50.5 in March, the National Bureau of Statistics said.

The reading is below analyst forecasts but remains above the 50.0 level separating expansion from contraction.

"The latest survey data disappoint hopes for a further recovery," said Julian Evans-Pritchard of Capital Economics.

"The official PMIs suggest that (the second quarter) got off to a weaker start and reinforce our view that there are still some downside risks to near-term activity," he said in a note.

Growth in factory activity from last month and new orders softened, while raw material inventories declined.

Tepid global demand and a trade war with Washington that has seen tariffs slapped on more than $360 billion in goods has weighed on China's manufacturing sector.

The new export and import orders sub-index rose from March, but remained in contraction territory.

Beijing has announced a raft of stimulus to cushion the impact from its cooling economy, with spending on roads, railways and other big-ticket infrastructure projects picking up early this year, and tax cuts worth 2 trillion yuan ($297 billion) kicking in this month.

Economic growth in the first quarter stabilised at 6.4 percent.

NBS analyst Zhao Qinghe credited government policy for improving small business conditions.

"It shows that a series of precise and effective tax and fee reduction policies and measures have gradually appeared to support the healthy development of small and micro enterprises," Zhao said in a statement.

Data from independent data provider Caixin released Tuesday also showed growth in China's factory activity softening from last month.

The figures come as top US trade negotiators arrive in Beijing later Tuesday for the latest round of negotiations aimed at resolving the thorny issues riling relations between the world's top two economies.

Chinese bank profits rise, but so do bad loans
Shanghai (AFP) April 30, 2019 - Profit at China's biggest banks accelerated in the first quarter in line with a better-than-expected performance in the domestic economy, but rising bad loans may pressure authorities to ease up on pump-priming measures.

Industrial & Commercial Bank of China (ICBC) -- the world's largest bank by assets and several other yardsticks -- posted a net profit of 82.0 billion yuan in the January-March period, up 4.1 percent.

China Construction Bank logged a 4.2 percent rise to 76.9 billion yuan, while the remainder of the "Big Four" banks -- Bank of China and Agricultural Bank of China -- saw similar percentage increases.

With the economy slowing and China's stock markets among the world's worst in 2018, the government embarked on a massive stimulus programme in the first quarter, at least partly to buffer the country from its trade war with the United States.

Markets have since rebounded and the economy beat expectations with 6.4 percent first-quarter growth.

But various recent government statements have been interpreted as signs that the flow of credit will be more closely scrutinised to prevent overheating, causing the benchmark Shanghai Composite Index to drop more than five percent since closing at 2019 high of 3,270.80 on April 19.

The official caution could intensify due to rising bad loans.

ICBC's non-performing loans rose 5.2 billion yuan in the quarter, which Bloomberg News said was the largest quarterly increase in nearly three years, while bad loans at China Construction Bank rose by 6.6 billion yuan, the highest since 2016.

"The level of bad loans that we are seeing in Chinese banks, that's coming through and hitting their income statements every year and forcing them to set aside more provisions, is really quite elevated," David Marshall, a senior analyst with CreditSights told Bloomberg Television.

"The good thing is that the economy seems to be stabilising this year thanks to the government stimulus measures," he said, though he adds credit growth "could tail off" in the second half.

Bank of China said its quarterly profit rose 4.0 percent to 51 billion yuan and Agricultural Bank of China's gained 4.3 percent to 61.3 billion yuan.

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