China’s Industrial Profits Decline in August Over Ongoing Trade Tensions

According to data released by the National Bureau of Statistics, China’s industrial profits declined 2% in August YoY to 517.8 billion yuan, after climbing 2.6% higher during the previous month. The ongoing trade war with the US and weakening domestic demand have driven a decline in industrial profits.

Industrial profits could fall even further as factory gate prices continue to slide lower even as economic growth falls to a 30-year low in China. Industrial production had also declined to the weakest level in 17.5 years during the month of August, even as exports slid lower on the back of escalating trade tensions.

Analysts expect further weakness in China’s industrial sector as long as the trade war continues, while the government could step in with stimulus measures to stem the fall in economic growth. Industrial profits so far this year till end-August were 1.7% lower YoY when compared to the same period in 2018. Meanwhile, China’s Q2 GDP is also expected to slip down to 6.2%.