Higher costs and a spike in taxes are squeezing the bottom line at China's state-owned companies, the Xinhua news agency reported, driving down profits and slowing down the rate of growth in operating income.

For the month of May, profits at state-owned enterprises fell by 11.8 percent, when compared to the prior year. That decline tracks the 10.4 percent decline in profits for the first five months of 2012, when compared to the same period in 2011.

Profits for the first five months of 2012 amounted to 830.13? billion ($133.56 billion), Xinha said in a report earlier this month, citing figures from the Ministry of Finance.

Industries where declines in profit occurred included non-ferrous metals, chemicals, construction materials, machinery and petrochemicals. Tobacco, automobile, commercial trading and telecommunications industries achieved relatively high growth, by contrast.

Operating income did see a rise in the first five months of the year, of about 11.3 percent, but a rise of 6.1 percent in taxes and fees ate up that excess cash flow and hurt profitability.