Industrial profits in China experienced a slower decline in July, hinting that initiatives aimed at curbing overcapacity may be alleviating pressures from intense competition among producers. According to data released by the National Bureau of Statistics on Wednesday, industrial profits decreased by 1.5 per cent last month compared to the previous year. This represents the smallest contraction since profits began to shrink in May. Over the first seven months of the year, overall earnings contracted by 1.7 per cent.
The manufacturing sector saw a more rapid increase in profits, growing by 6.8 per cent in July year-on-year, following a 1.4 per cent gain in June, according to statistician Yu Weining. Raw material producers, steelmakers, and petroleum refiners transitioned from losses to profitability during the month. Yu Weining noted that policy measures designed to promote a reasonable rebound in prices were gradually implemented, which drove a continuous recovery in corporate profitability.
Despite these positive developments, profit margins remain under pressure due to softening domestic demand, even as government-led efforts to curb excess competition begin to translate into improved earnings. China’s economy experienced broad weakening in July, with consumer inflation slipping to zero and retail sales growth cooling off. The figures suggest a mixed economic landscape, with some sectors showing resilience while others grapple with ongoing challenges.
