AlwaysFree: China’s Industrial Profit Grows Slower As Raw Material Costs Climb

China’s industrial firms saw their profit grow slower in June as high raw material costs weighed on their margins. According to data from the National Bureau of Statistics, industrial firms’ profits stood at CNY791.8 billion ($122.27 billion) in June. That represents a 20% year-on-year increase, decelerating from 36.4% growth in May and marking a fourth straight month of slowdown. In January-June 2021, industrial firms’ profits expanded 66.9% from a year earlier.

The metal, chemical, and pharmaceuticals industries led the profit increase in June, the NBS said. However, surging raw material costs and global supply chain bottlenecks have put a lid on China’s growth, analysts said. Beijing proceeded with measures to curb surging commodity prices last month which resulted in easing producer price inflation. Nevertheless, the factory gate inflation is expected to remain high in the remainder of the year.

Private firms and small businesses are particularly rebounding slower than state-owned and larger enterprises. They noted that upstream producers saw profit margin improve further, while downstream companies experienced a contraction. China’s manufacturing activity slowed down last month as a resurgence of COVID-19 cases prompted authorities to reimpose strict restrictions, which slowed down ports’ processing capacity in the export hub province of Guangdong. 

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