China's industrial profits down in May as recovery continues

China's major industrial firms experienced a smaller decline in profits in May, according to official data released Wednesday. Analysts urged for additional support to stimulate demand.

Data from the National Bureau of Statistics (NBS) revealed that combined profits for large industrial firms reached 635.8 billion yuan ($88.7 billion) in May, a 12.6 percent decrease compared to the same period last year. This represents an improvement from April's 18.2 percent drop.

The slightly better-than-expected performance in May was primarily driven by profit margin recovery, according to Wen Bin, chief economist at China Minsheng Bank. However, he warned that there is still considerable pressure from insufficient demand and a weak producer price index (PPI).

NBS data also showed that profits for Chinese industrial firms declined by 18.8 percent year on year in the first five months of 2023, narrowing by 1.8 percentage points from the January-April period.

Wen predicts that the decline in industrial profits will continue to shrink as the PPI is expected to hit its lowest point in mid-year, and government policy support will contribute to an increase in factory production.

NBS statistician Sun Xiao cautioned that the recovery of industrial firms is still fragile due to a complex and challenging external environment, as well as insufficient domestic demand.

Sun called for increased efforts to boost growth momentum and support the recovery of the industrial economy.

(CGTN)