China’s industrial profits drop for second month amid price wars

China’s industrial earnings fell for a second straight month, with authorities set to intensify their drive to rein in excessive competition that’s dragging down prices and compounding the pain from US tariffs.Industrial profits dropped 4.3% last month from a year earlier, after a contraction of 9.1% in May, according to data released Sunday by the National Bureau of Statistics. That took the decrease in the first half of this year to 1.8%.

Bloomberg Economics had forecast a decline of 8% year-on-year in June.
The extended earnings decrease underscored the urgency to curb cutthroat competition among companies — dubbed “involution” in China — as the authorities seek to reduce deflationary pressures in an economy suffering from weak domestic demand.Exports to the US plunged after Donald Trump’s tariffs raised the cost of selling goods in the world’s biggest consumer market, likely further squeezing the profit margins of Chinese manufacturers.

The smaller haul hurts business confidence and could make companies more reluctant to invest and hire.

Top economic policymakers pledged at a key meeting earlier this month to crack down on “disorderly” low-price competition and phase out outdated industrial capacity, triggering recent rallies in the cost of polysilicon and other commodities.