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China’s slowing industrial profits growth adds further evidence to loss of economic momentum
- Industrial firms’ profits in July increased 16.4 per cent on an annual basis – the slowest rate this year – to 703.67 billion yuan (US$108.5 billion)
- Zhu Hong, senior statistician at the National Bureau of Statistics, attributed the slower growth to sporadic coronavirus cases, flooding and high commodity prices
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Earnings at China’s industrial firms in July slowed for the fifth straight month, adding to growing evidence of a loss of momentum in the world’s second-biggest economy and bolstering the case for maintaining policy support for a while longer.
Elevated raw material prices and supply chain constraints from extreme weather as well as sporadic coronavirus cases dragged on earnings in the manufacturing sector, data from the National Bureau of Statistics (NBS) showed on Friday.
Industrial firms’ profits in July increased 16.4 per cent on an annual basis – the slowest rate this year – to 703.67 billion yuan (US$108.5 billion), the NBS said. That compared to a 20 per cent gain in June.
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China’s economy has staged an impressive recovery from a coronavirus-battered slump, but the expansion is losing steam as businesses grapple with higher costs and supply bottlenecks, and as consumers remain cautious with spending.
On economic fundamentals, signs of a notable economic slowdown have emerged, and I expect policymakers to fine-tune the macroeconomic policy
The headwinds to growth back expectations Beijing will keep, or even bolster, its accommodative stance. The People’s Bank of China in mid-July lowered the reserve requirement ratio for banks, releasing around 1 trillion yuan (US$154 billion) in long-term liquidity.
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