Profits at China’s industrial firms dropped by 1.1% year-on-year to CNY 2,720.43 billion in the first five months of 2025, reversing a 1.4% gain in the January - April period. The decline highlights ongoing deflationary pressures and growing trade uncertainty amid steep U.S. tariffs. Profits at state-owned enterprises contracted more sharply (-7.4% vs -4.4% in January-April), while profit growth in the private sector slowed (3.4% vs 4.3%). By industry, profits decreased in coal mining (-50.5%), automobiles (-11.9%), oil and gas extraction (-10.4%), and chemicals (-4.7%). In contrast, profit grew in agriculture (38.2%), computer and communications (11.9%), electrical machinery (11.6%), general manufacturing (10.6%), non-ferrous metal smelting and rolling (9.8%), special equipment (7.1%), heat production (5.7%), and non-metallic mineral products (0.6%). In May alone, industrial profits shrank by 9.1% yoy, swinging from a 3.0% increase in April and marking the first fall in three months.