China’s industrial profits fall more slowly amid crackdown on price wars
Industrial profits have been shrinking since May, but policy measures designed to promote rebound in prices are aiding recovery, NBS says
China’s industrial companies saw their profits fall at a slower pace in July, in a potential sign that efforts to curb overcapacity are starting to ease the strain from aggressive competition among producers.
Industrial profits declined 1.5 per cent last month from a year earlier, falling the least since they began shrinking in May, according to data released on Wednesday by the National Bureau of Statistics. For the first seven months of the year, earnings contracted 1.7 per cent year on year.
Profits climbed much faster in the manufacturing sector, growing 6.8 per cent in July from a year ago after a gain of 1.4 per cent in June, statistician Yu Weining said in a statement accompanying the data release. Producers of raw materials, steelmakers and petroleum refiners moved from losses into profits in the month, but profits in the mining sector continued to fall.
“Policy measures to promote a reasonable rebound in prices were gradually implemented, driving corporate profitability to recover continuously,” Yu said.
Profit margins are still under pressure after domestic demand softened further, even as a government-led campaign to curb excess competition begins to translate into better earnings. The world’s second-largest economy weakened across the board in July, with consumer inflation slipping to zero while retail sales growth cooled.
Factory-gate prices have declined for 34 consecutive months, pointing to entrenched deflation that could hold businesses and households back from spending and act as a drag on corporate bottom lines.