An employee works on the electric vehicle (EV) production line at the Zeekr factory in Cixi, Zhejiang province, China March 19, 2025. REUTERS/Florence Lo/File Photo
BEIJING: China's industrial profits swung back into a sharp decline in May from a year earlier, as factories slowed activity in the face of broader economic stress and a fragile trade truce with the United States.
Deepening deflationary pressures and a persistent property crisis continued to undercut demand and economic growth despite an unexpected pickup in retail growth last month.
Profits at China's industrial firms fell 9.1% in May from a year earlier, snapping a two-month growth streak, National Bureau of Statistics data showed on Friday.
Industrial profits slid 1.1% in the first five months of 2025 from the same period last year. This compares with a 1.4% increase in the January-April period.
The profit decline was due to "insufficient effective demand, declining prices of industrial products and fluctuations in short-term factors," said NBS statistician Yu Weining.
With U.S. tariffs set to remain high, factories are facing immense strains, particularly in sectors such as autos where excessive competition has prompted an official call to end bruising price wars.
Local auto dealers have appealed for automakers to stop dumping cars on dealerships, saying the intense price war was damaging their cash flow, driving down their profitability and forcing some to shut.
Profits at state-owned firms dropped 7.4% in the first five months. Private-sector companies recorded a 0.3% increase and foreign firms saw a 3.4% rise, according to a breakdown of the official data.
Industrial profit numbers cover firms with annual revenue of at least 20 million yuan ($2.78 million) from their main operations. - Reuters
