China’s industrial profits fell 9.1% in May from a year earlier, ending a two-month growth streak, as weak demand, falling prices, and trade pressures weighed on factory activity.
The decline came amid broader economic challenges, including deflation and ongoing problems in the property sector.
The National Bureau of Statistics said on Friday that profits dropped due to low effective demand, falling industrial product prices, and short-term fluctuations. For the first five months of 2025, industrial profits slipped 1.1% compared to the same period last year, down from a 1.4% increase in January through April.
Factory-gate prices continued to fall last month, recording their worst drop in nearly two years. Consumer prices also declined further. The drop in prices followed high U.S. tariffs on Chinese goods and domestic price competition in sectors such as automobiles.
Chinese automakers have come under pressure due to overcapacity and price wars. Local dealers have called on manufacturers to stop oversupplying vehicles, saying it has hurt cash flow and led to some closures. Officials have also urged companies to reduce excessive competition in the sector.
State-owned firms recorded a 7.4% decline in profits in the first five months of the year. Private firms saw a slight rise of 0.3%, while profits at foreign companies increased by 3.4%.
Some signs of household resilience remain, including stronger-than-expected retail sales in May. Still, many observers believe more policy measures are needed to support economic recovery.
Industrial profit data covers companies with annual revenue of at least 20 million yuan, or about $2.78 million, from core operations.
