Key Facts
• China’s industrial profits fell for the second consecutive month in June 2025.
• June profits dropped 4.3% year-on-year, following a 9.1% decline in May.
• Cumulative profits for January-June 2025 decreased by 1.8% year-on-year.
• Excessive competition among domestic firms is driving price declines and profit pressures.
• U.S. tariffs have significantly reduced exports to the U.S. and raised selling costs.
• Weak domestic demand and deflationary pressures are challenging China’s economy.
• Declining profits may dampen business sentiment, investment, and employment intentions.
Summary
China’s industrial profits continued to decline in June 2025, marking a 4.3% year-on-year drop, following a 9.1% decrease in May. Cumulative profits for the first half of the year fell by 1.8%. The decline highlights the impact of excessive domestic competition, which has driven down prices and squeezed profit margins. Additionally, U.S. tariffs have reduced exports to the U.S. and increased costs in the world’s largest consumer market. Weak domestic demand and deflationary pressures further exacerbate the challenges for China’s economy. The ongoing profit slump risks undermining business confidence, potentially affecting investment and employment.
