China's profits rose faster in June despite a slowing economy

China's profits rose faster in June despite a slowing economy
China's industrial profits experienced a notable increase in June, as reported by official data on Saturday (27th of July), despite businesses facing challenges from a decline in consumer sentiment amid a fragile economic recovery. Profits rose by 3.6% year-on-year last month, up from a mere 0.7% gain in May. For the first half of the year, earnings climbed 3.5%, an acceleration from the 3.4% increase recorded in the January-May period, according to data from the National Bureau of Statistics (NBS). This encouraging data stands in contrast to a slowing economy that fell short of forecasts in the second quarter, with the consumer sector struggling due to job market difficulties and a prolonged downturn in the housing sector. Approximately half of the more than ten mainland-listed alcoholic beverage companies that have released forecasts for their first-half earnings anticipated losses during this period. Nonetheless, despite escalating trade tensions with the West, optical transceiver firms Zhongji Innolight and Suzhou TFC Optical Communication are predicting significant increases in their first-half earnings. These two suppliers for U.S. chip giant Nvidia have emerged as major beneficiaries of the global artificial intelligence expansion. In response to its fragile economic landscape, China is implementing more aggressive monetary stimulus measures. On Thursday, it surprised markets for the second time by conducting an unscheduled lending operation at significantly lower rates. Just days earlier, authorities had reduced several benchmark lending rates following a high-level leadership meeting that outlined key reforms. Additionally, the country's state planner and finance ministry announced plans on Thursday to mobilize approximately 300 billion yuan in funds from ultra-long special treasury bonds to enhance a nationwide equipment upgrade and consumer goods trade-in initiative.