Profits for industrial companies in China dropped 8.8 percent in August, compared to the previous year, Bloomberg reported Monday. It was the biggest fall since October 2011, when the Chinese government first published such data. Chinese coal, oil and gas and metal companies had the greatest losses, information from the National Bureau of Statistics showed.
The reported losses follow the crash in mid-August of the Shanghai Composite Index, which reverberated globally, as markets and indexes in Europe, the United States and Australia sank in response. Prior to the crash, the People's Bank of China had devalued China's currency, the yuan, in an effort to fend off an economic slowdown, to little avail.
China's economic woes stem in part from decreased demand for goods manufactured there. In August, foreign and domestic demand dropped for such products, and factories cut jobs for the 24th month in a row, Reuters reported Sept. 1. In August, Chinese industrial production grew 6.1 percent year-on-year, below the median growth forecast of 6.6 percent, the Wall Street Journal reported.
— Bloomberg Business (@business) September 28, 2015
In the coal-mining industry, profits dropped 64.9 percent in the first eight months of 2015. Profits in the oil and gas sector fell 67.3 percent. The sagging profits were due in part to lower prices, as well as lower returns on investment, a Chinese official at the National Bureau of Statistics, told Bloomberg. Higher costs also contributed to decreasing profits, as the recent stock market slump helped drive up spending and decrease investment returns.
China is the world's second-largest economy. State-owned companies had fared the worst of all, with profits dropped by 24.7 percent in the first eight months of 2015, compared to an increase in profits of 7.3 for privately held corporations, the report from the National Bureau of Statistics showed.