China’s industrial profits saw a sharp decline in August, plunging by 17.8% year-over-year, according to data released by the National Bureau of Statistics on Friday. This steep drop follows a brief recovery in July, when profits grew by 4.1%, marking the fastest increase in five months.
Industrial profits, which encompass factories, mines, and utilities, fell as broader economic challenges persist in the world’s second-largest economy. For the first eight months of the year, profits at large industrial firms grew a modest 0.5%, totaling 4.65 trillion yuan ($663.47 billion).
The figure represents a significant slowdown from the 3.6% growth recorded in the first seven months of the year.
The Chinese government has escalated its efforts to support economic growth, amid fears of missing its full-year GDP target of around 5%. Sluggish domestic demand, an ongoing property market downturn, and rising unemployment continue to weigh heavily on the nation’s economy.
Earlier in the week, China’s top leadership, led by President Xi Jinping, called for immediate action to halt the property slump and enhance fiscal and monetary policy support.
In response, the People’s Bank of China lowered the reserve requirement ratio (RRR) by 50 basis points, a move designed to free up more cash for banks to lend. Additionally, the central bank reduced the 7-day reverse repurchase rate by 20 basis points, cutting it to 1.5%.
Meanwhile, recent economic data points to broader challenges. Industrial production in August rose by 4.5% year-over-year, while retail sales increased by just over 2%, both below expectations.
Fixed asset investment, particularly in real estate, fell by 10.2% year-to-date through August, maintaining the same rate of decline as in July. The urban unemployment rate also ticked up to 5.3% in August from 5.2% the previous month.