In May, profits for China's industrial firms increased by 21.1% year-over-year, down from 24.7% in April, according to the National Bureau of Statistics. For the first five months of the year, profits rose 18.8%, slightly higher than the 18.2% increase seen in the first four months.
The growth was driven primarily by upstream sectors, particularly the computer industry, which saw profits soar by 103.9%, contributing significantly to overall profit growth. However, downstream manufacturing sectors faced challenges, with automakers experiencing a 19.8% decline in profits and furniture makers suffering a 58.4% drop.
The ongoing conflict in Iran adds uncertainty to the market, with analysts suggesting that a resolution could help stabilize profits in downstream sectors. Additionally, China's central bank is reportedly encouraging banks to increase lending to support the economy, which is struggling with weak domestic consumption and rising factory-gate inflation.
These trends highlight the need for targeted government support to address the disparities in profit growth across different sectors and to stabilize the overall economy