Profit growth at China's industrial firms slowed to a five-month low in August, fanning concerns about faltering domestic demand in the world's second-largest economy as escalating trade frictions with the United States cloud its outlook.
Demand for raw materials and industrial products has taken a hit this year as business expansion plans slowed, restrained by tighter funding due to China's multi-year campaign to curb corporate debt and crack down on risky borrowing. A softer property market has also sapped construction-related demand.
Industrial profits rose 9.2 percent in August to 519.69 billion yuan ($76 billion), data from the National Bureau of Statistics (NBS) showed on Thursday. The pace of growth slowed for a fourth straight month and almost halved from the 16.2 percent gain in July.
Last month's slowdown was mainly due to a double whammy of slower revenue and factory price gains, the statistics bureau said in a statement accompanying the data release.
"Corporate profitability will continue to worsen, as the recent policy boost to spur investment growth will take time to set in," said Yang Yewei, an analyst at Southwest Securities. He noted both inventories and money owed to companies had edged up, a sign that business conditions were becoming increasingly challenging.
The profit slowdown points to persistently weakening demand under the ongoing deleveraging campaign, despite policymakers shifting their focus to growth-boosting strategies. These measures include accelerating approvals for infrastructure projects and financing support for the private sector.