Profits at China's large industrial enterprises declined for a second straight month in June, as persistent overcapacity, deflation at the factory gate, and wavering domestic demand pressured corporate black ink.

China industry reported profits fell 4.3% on year in June, following a 9.1% on-year drop in May, reported the National Bureau of Statistics (NBS) on Sunday.

Cumulatively, profits in the first half of 2025 were down 1.8% on-year, widening from the 1.1% decline recorded in the January-May period, according to officials.

However, profits at state-owned enterprises dropped 7.6% on-year in the first half, while private firms posted a 1.7% increase. Foreign-invested companies saw a 2.5% rise in profits, reported the NBS.

The NBS figures cover industrial firms with annual revenues exceeding 20 million yuan ($2.8 million) from main operations.

China's vast manufacturing sector has been the topic of review in Beijing, with government agencies assessing "overcapacity" within various segments.

Beijing "plans to amend a decades-old pricing law as part of an ongoing campaign to curb the vicious price wars plaguing several industries--a deep-rooted issue that threatens to wipe out corporate profits and fuel deflationary pressure," reported the South China Morning Post last week.

Government officials on Sunday again reiterated plans to ease industrial competition in China.

To cope with industrial overcapacity and the evolving international trade environment, China must develop a "unified national market, bolster domestic circulation, and push for high-quality growth in the industrial economy," said Yu Weining, an NBS official, in a prepared statement.

Indeed, China's producer price index (PPI) fell 3.6% on year in June, steepening from a 3.3% decline in May, reported the NBS earlier this month. A price softness is generally considered one sign of overcapacity in China.

In emerging from the pandemic era, China's huge economy has been afflicted by persistent soft property markets, related sluggish consumption, and excess industrial capacity.

The People's Bank of China has eased monetary policy through 2025, and Beijing officials have stepped up spending and vowed reforms.

But in recent months, both China's PPI, and the nation's consumer price index have logged in or near deflation.