China’s industrial profits edge up in 2025, reversing three years of declines

China’s industrial profits saw a modest increase of 0.6% in 2025, marking a turnaround from three consecutive years of declines. This growth was attributed to government intervention to curb aggressive price competition and the efforts of companies to expand their operations overseas in response to weak domestic demand.

The data from the National Bureau of Statistics showed that industrial profits grew by 5.3% in December, the strongest performance since September. This increase was fueled by pre-holiday stockpiling ahead of the Lunar New Year in February, which boosted factory activity after eight months of contraction.

Despite the overall growth, there was a high level of variance across different sectors. While profits in manufacturing and utilities rose, the mining sector saw a significant decline of 26.2%. Ferrous metal smelting and electronics manufacturing sectors experienced substantial gains, while coal mining and oil extraction industries faced sharp declines.

State-owned enterprises reported a decrease in profits, while foreign-funded businesses recorded an increase. The growth drivers in 2025 included equipment and high-tech manufacturing, with industries like railway, aerospace, and electronics posting double-digit profit growth.

However, challenges remain for some industrial firms, with external factors playing a crucial role in profitability. Regulatory efforts to curb aggressive price cuts and promote fair competition are expected to improve the overall business environment over time.

Despite the positive economic growth in 2025, there is a call for further policy support to boost domestic demand and overall economic growth. Retail sales lagged behind industrial output growth, prompting the Chinese government to focus on increasing household spending on consumer goods and services.

In conclusion, China’s industrial sector showed signs of recovery in 2025, driven by a combination of government intervention and companies’ strategic decisions. While challenges persist, there is optimism for continued growth with the right policy support and a focus on stimulating domestic demand.