Excavators transport coal at a coal plant in east China's Jiangsu Province on January 22, 2024.
Street | AFP | Getty Images
China's industrial profits fell by 17.8% in August compared to last year, the largest decline in more than a year, National Bureau of Statistics data showed on Friday.
This followed a 4.1% year-on-year increase in July, the fastest pace in five months. Industrial earnings data covers factories, mines and utilities in China.
The 17.8% decline was the largest since an 18.2% drop in April 2023, according to official data accessed by Wind Information.
The Census Bureau attributed the significant decline in August to a high base in the same period last year. In August 2023, the same monthly figure increased by 17.2% compared to last year.
This decline led to a decline in industrial profits for the year. In the first eight months of the year, profits at major industrial companies grew 0.5% to 4.65 trillion yuan ($663.47 billion), compared with a 3.6% increase in the first seven months.
During that eight-month period, the mining and oil industries saw the largest declines in profits. Smelters and processors of metals other than iron saw the largest profit gains during that period.
Electronic equipment manufacturers and the food processing industry also recorded significant profit gains during the period, the statistics office said.
State-owned companies recorded a 1.3% decline in their profits in the first eight months of the year, while non-state-owned companies saw their profits rise by 2.6%.
Foreign industrial companies, which include those with investments from Hong Kong, Macau and Taiwan, saw their profits rise 6.9% in the January-August period from a year ago.
The Chinese government stepped up efforts this week to support economic growth amid concerns that Beijing may not meet its full-year gross domestic product target of about 5%. Slowing domestic demand, a prolonged housing market contraction, and high unemployment rates have affected the world's second-largest economy.
On Thursday, China's top leaders called for halting the real estate slump and strengthening fiscal and monetary policy support, according to a readout from a high-level meeting chaired by Chinese President Xi Jinping.
The People's Bank of China on Friday officially reduced the amount of cash banks need to hold, known as the reserve requirement ratio or RRR, by 50 basis points. The central bank also cut the 7-day reverse repo rate by 20 basis points to 1.5%, from 1.7% previously.
The interest rate cut came after the announcement by Central Bank Governor Pan Gongsheng in a press conference on Tuesday.
In August, industrial activity, retail sales and urban investment in China grew slower than expected, with retail sales rising by just 2% and industrial production by 4.5% compared to last year.
Among fixed asset investments, real estate fell by 10.2% over the year to August, the same pace of decline recorded in July. The urban unemployment rate was 5.3% in August, compared to 5.2% the previous month.
