China's Industrial Profits Plunge 17.8% Amid Economic Struggles

China's industrial sector faced a sharp setback in August 2024, with profits plunging by 17.8% year-on-year, marking the steepest decline in more than a year, according to the National Bureau of Statistics. This dramatic drop followed a promising 4.1% profit increase in July, the fastest growth in five months.

Per CNBC, the significant August decline is attributed to a high comparative base from the previous year, where profits had surged by 17.2%.

For the first eight months of 2024, large industrial firms saw only a modest profit growth of 0.5%, reaching 4.65 trillion yuan ($663.47 billion). This reflects a slowing economy, particularly within the mining and oil industries, which experienced the most significant profit declines.

In contrast, the electronic equipment and food processing sectors posted strong gains. Meanwhile, state-owned firms saw a 1.3% dip in profits, while non-state-owned enterprises enjoyed a 2.6% increase. Profits of foreign industrial firms, including those with investments from Hong Kong, Macao, and Taiwan, rose by 6.9%.

China's economic struggles are compounded by sluggish domestic demand, a prolonged housing market downturn, and rising unemployment. In response, the government has rolled out measures to boost economic growth, including cutting the reserve requirement ratio for banks and lowering key interest rates.

Despite these efforts, concerns remain about China missing its full-year GDP growth target of around 5%.