China’s slowing economy is dragging down production activities and price increases, with the growth rate of profits for industrial enterprises falling for the third consecutive month. According to official data, profits of industrial enterprises above a certain scale in July increased by 11.2% year-on-year, a decrease of 3.9 percentage points from June, reaching a new low for the year.
The data released by the National Bureau of Statistics of the Communist Party of China on Thursday, August 27, showed that profits of industrial enterprises above a certain scale nationwide in July grew by 11.2% year-on-year, lower than the 15.1% growth in June.
In the first seven months of this year, profits of industrial enterprises grew by 17.6% year-on-year, slightly lower than Bloomberg Economics’ forecast of 18.1%, and the growth rate slowed further from 18.7% in the first half of the year. This survey covers companies with core business annual revenue exceeding 20 million yuan.
The data indicates that with weakening domestic demand and the gradual fading of the boost from the previous rise in oil prices, corporate profits are facing pressure.
In July, China’s industrial production, consumption, and investment data were all below expectations.
Bloomberg believes that since the beginning of this year, with the push of the Iran war driving up global commodity prices and the surge in demand for artificial intelligence-related products, profits of Chinese industrial enterprises have begun to steadily rise. Now, as profit growth slows, companies may become more cautious about business prospects and capital expenditure, further increasing downward pressure on the economy.