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Industrial profits' drop signals deepening China gloom

By Religare
|

A drop in China's industrial profits in June signaled a worsening slowdown in the world's second biggest economy, boosting the case for policymakers to provide a fresh injection of aggressive and well-directed stimulus as growth threatens to slip to a two-decade low.

Industrial profits in China fell 0.3 per cent in June 2015 from the same month a year ago, government data showed on Monday.

In May 2015, profits of Chinese industrial companies climbed 0.6 per cent from the same month a year ago.

 

For the January-June 2015 period, industrial profits fell 0.7 per cent over the same period a year ago.

The latest data comes hot on the heels of Friday's report which showed that manufacturing contracted at the fastest pace in 15 months in July, a sign that Chinese factories are feeling the pain of weakening domestic and overseas demand, aside from battling tighter pollution norms and industrial overcapacity issues.

While a steep stock market sell-off, the government's clampdown on extravagant spending by public officials; coupled with a lingering property market slump has limited domestic demand; a darkening global economic outlook amid the ongoing debt troubles in Europe have adversely affected exports, weighing on the country's manufacturing sector.

Story first published: Monday, July 27, 2015, 23:00 [IST]
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