Data published by the National Bureau of Statistics (NBS) showed that between January and May, industrial profits grew by 3.4% per year after increasing by 4.3% in the first four months of 2024. Industrial profit numbers cover firms with annual revenue of at least 20 million yuan from their main operations. The latest result underlining the struggles faced by the world's second-largest economy as weak domestic demand crimps overall growth. NBS said that industrial profits increased by 0.7% in May, slowing sharply compared to April (+4.0%).
"Effective domestic demand remains insufficient ... and the basis for restoring industrial profits is not yet solid. The slowdown in the growth of industrial profits was caused by short-term factors, including a decline in investment proceeds growth," said Yu Weining, a statistician from the NBS.
The report also showed that from January to May, the profits of state-owned companies fell by 2.4% per year after declining by 2.8% from January to April, while profits of private companies rose by 7.6%, accelerating compared to January-May (+6.4%). Meanwhile, the profits of foreign companies rose by 12.6% from January to May, compared with +16.7% in the first four months of 2024.
NBS said that close to 80% of China's industrial sectors witnessed rising profits from January to May, with the equipment manufacturing sector continuing to contribute the most to overall growth with an 11.5% profit jump.