China’s Industrial Profit Slump: Warning Signs for the Global Economy

China’s Industrial Slowdown Deepens

China’s industrial profits fell 9.1% in May, the steepest drop since October, as new US tariffs bite and deflationary pressures persist. This reversed a modest gain earlier in the year and signals ongoing stress in the world’s second-largest economy.

Key Stats:

• Industrial profits YTD are down 1.1%.

• May profit contraction occurred despite 5.8% growth in output.

• Total profits at 2.72 trillion yuan are 20% below 2021–2022 levels.

  

  
  

What’s Driving the Weakness?

• Trump’s tariff policies are hitting exporters hard.

• Deflation is weighing on prices and margins.

• Investment and hiring outlook dims due to weak confidence.

MoneyMaster Take — Key Insights:

1. Tariffs are dragging down China’s manufacturing sector, threatening global supply chains.

2. Government subsidies for equipment upgrades are cushioning the blow — but not reversing it.

3. Markets should brace for more stimulus from Beijing to maintain growth targets.

Our Move:

Investors with China exposure should monitor stimulus signals closely. This may benefit infrastructure plays, domestic tech, and select consumer sectors. For global positioning, consider hedging through commodities or defensive equities.