According to the Economist’s article, Chinese industrial firms are experiencing their worst year in decades in regards to their profits.

Author Muge Hizal Dogaroglu | Copperberg

The trade war between the US and China has been going on between two countries for over a year now and the additional tariffs from the US that will go into effect on September 1st are said to further stress the vulnerable Chinese industrial economy.

In addition to tariffs from the US, Chinese industrial companies feel pressure from their government as well. Chinese firms used to depend on governmental stimulus packages to go through hard times, the article explains. However, it is said that officials have refrained from doing so this year as a way to control debt levels.

As a result, “the producer prices are veering towards deflation which will likely to cause the industrial profits to decrease even more.”