Stay informed with free updates
Simply sign up to the Chinese economy myFT Digest — delivered directly to your inbox.
Major Chinese industrial companies’ profits fell last month by the most since October, according to official data, in the latest sign of economic stress to emerge amid trade tensions with the US.
Profits across companies with revenues of more than Rmb20mn ($2.8mn) dropped 9.1 per cent in May on the same month last year, the National Bureau of Statistics reported on Friday.
The reading showed a steady 1.4 per cent cumulative profit growth from January to April swinging to a 1.1 per cent decline in May.
The data will add to concerns about the trajectory of the Chinese economy, which had been struggling to gain momentum under the weight of a property slowdown and a deflationary backdrop even before a trade war with the US escalated in April.
US President Donald Trump said on Thursday that a tariff truce with China agreed in London earlier this month had been signed. Under the deal, the countries had agreed to climb down from levies as high as 145 per cent, but tensions remain over Chinese rare earth exports and US technology export controls.
The slump in industrial profits followed other recent signs of weakness in the world’s second-largest economy, adding to pressure on Chinese policymakers.
Data released last week showed a jump in retail sales but weaker growth in industrial production in May.
Manufacturing purchasing managers’ indices, a gauge of factory activity, have also entered contraction in the past two months, while exports to the US last month plunged by the most since the start of the Covid-19 pandemic.
New home prices also faltered in May, after earlier signs of improvement in China’s biggest cities.
Deflation, for years a major challenge for China’s economy, persisted for the fourth straight month in May. The consumer price index edged 0.1 per cent lower, while producer prices fell by the most since 2023.
Yu Weining, a statistician at the NBS, said the decline in industrial profits was affected by multiple factors, including “insufficient effective demand” and “falling industrial product prices”.
Limp consumer spending has become a focal point of the government, with President Xi Jinping emphasising the need to boost domestic demand late last year. Authorities are targeting GDP growth of around 5 per cent for 2025, in line with last year.
The government has also launched a trade-in programme for products such as household appliances in an effort to spur demand, which this year was expanded. The NBS pointed to the effects of the policy, saying profits in equipment and special equipment industries had grown 10.6 per cent and 7.1 per cent year on year respectively.
But in a sign of pressures in the highly competitive auto sector, carmakers’ profits were down 11.9 per cent in the first five months.
Data visualisation by Haohsiang Ko in Hong Kong
