State-owned enterprises reported profits of 1.34 trillion yuan ($218 billion) in the first eight months of the year, 12.8 percent less than in the same period last year, the Ministry of Finance said on Monday.

August extended the year-on-year declining trend seen in the first seven months, though profits were up 1.1 percent compared with July.

The revenue of SOEs was up 9.7 percent in the first eight months, but the increase was outpaced by even faster growing costs.

According to the Finance Ministry, total costs and expenses for SOEs were up 11.5 percent in the first eight months.

Lu Zhengwei, chief economist with the Industrial Bank Co, said that expenses with taxes have been growing since 2009, and it's time to launch more measures to lower the tax burden for companies.

Cao Jianhai, a researcher with the Chinese Academy of Social Sciences, said the shrinking profits of SOEs — which were the worst hit among all types of companies amid the economic slowdown — are closely related to their expansion during the 2008 stimulus program.

The National Development and Reform Commission has recently approved a new round of investment-driven projects, which may help restore the profits for SOEs in the near future, Cao said. However, policy-driven growth for profits is unhealthy, he added.

In a breakdown of industries, the tobacco, electricity, and automobile sectors saw growing profits, while the chemical, nonferrous, transport, building materials, and petrochemical industries saw sharp declines.

According to Haitong Securities, the profits of downstream industries are stabilizing, whereas companies in the upper and middle reaches may see a further decline in profits.