Declining Industrial profits in China strike fear on Economic growth

The industrial sector of China dropped in June after short-lived gains, which raises concerns that the slowdown will affect the economic growth amid the trade war. 

Since the second half of last year, the economy has slowed while the US-Sino trade war further escalated. Industrial firms reacted by putting on hold their business decisions and moving back on manufacturing investment. Overall, the second-quarter growth dropped close to a 30-year low. 

Statistics of Industrial profit show a drop of 3.1% in June from 1.1% gain in May to 601.9 billion yuan or $87.5 billion, based on the data from National Bureau of Statistics (NBS) on Saturday. 

In the first half of the year, profits were around 2.98 trillion yuan from a decline of 2.4% from last year, compared to a 2.3% drop in the first three months of the year. 

Low performance in the auto, oil manufacturers and steel sectors was the main driver of the decline in three months to March. 

Producer price inflation reached to zero in June from last year, which raises a concern of deflation that could influence officials to implement an aggressive stimulus program. 

On Tuesday, the meeting of U.S. and Chinese negotiators is expected to talk on the agreement with the ongoing trade war for quite a long time. 

Tariffs were imposed on imports of both countries, affecting the supply chain and the financial market on how China will trade globally. 

So far in June, this month entails the higher US tariffs on $200 billion of Chinese goods as a consequence of failure to end the trade talk. Hereinafter, both exports and imports dropped.