China’s industrial profits edge up in 2025, reversing three years of declines
China’s industrial sector experienced a modest recovery in 2025, with profits rising 0.6% year-over-year, marking the end of three consecutive years of decline. This improvement comes as Beijing implemented measures to address aggressive price competition and as companies increasingly focused on expanding into overseas markets amidst sluggish domestic demand.
A Shift in Economic Momentum
The growth rate accelerated from 0.1% recorded in the January-to-November period, according to data released by the National Bureau of Statistics. December saw a particularly strong performance, with industrial profits climbing 5.3% compared to the previous year – the highest increase since a 21.6% surge in September.
The rebound is largely attributed to policy interventions aimed at curbing price wars and companies’ strategic shift towards international growth, as noted by Tianchen Xu, a senior economist at the Economist Intelligence Unit. Factory activity in December also returned to growth after eight months of contraction, partially driven by pre-holiday stockpiling ahead of the Lunar New Year in February.
Sectoral Disparities
Despite the overall positive trend, the recovery is uneven across different sectors. Lynn Song, chief Greater China economist at ING, highlighted a “high level of divergence,” indicating that price competition continues to pressure margins.
The mining sector experienced a significant decline, with profits falling 26.2% for the year. Conversely, manufacturing and utilities saw increases of 5% and 9.4%, respectively. Within manufacturing, ferrous metal smelting and rolling processing firms enjoyed a substantial profit surge of 22.6%, while electronics manufacturing rose by 19.5%.
Notably, smart consumer electronics witnessed a 48% profit jump, with unmanned aerial devices and intelligent in-car appliance manufacturers reporting gains of 102% and 88.8%, respectively. However, coal mining and oil and gas extraction profits decreased by 41.8% and 18.7% respectively.
Looking Ahead
While Beijing has expressed satisfaction with the overall economic growth of 5% in 2025 – aided by strong export performance and a temporary U.S.-China trade truce – economists suggest further policy support is needed to stimulate domestic demand. Retail sales grew by 3.7% in 2025, lagging behind both overall economic growth and the 5.9% expansion in industrial output.
The Chinese Commerce Ministry indicated plans to boost household spending on cars, appliances, and electronics, as well as target growth in the services sector. Progress in Beijing’s “anti-involution” push, aimed at curbing excessive price cuts, could also contribute to improvements, though ING’s Song cautions that this will likely take time.
Frequently Asked Questions
What drove the increase in industrial profits in 2025?
The increase was driven by policy intervention to curb aggressive price undercutting and companies’ efforts to expand overseas.
Which sectors experienced the largest profit declines in 2025?
The mining sector experienced the largest decline, with profits falling 26.2% from a year earlier. Coal mining and washing industry profits fell 41.8% and oil and gas extraction dropped 18.7%.
What is Beijing planning to do to further boost the economy?
Beijing plans to step up efforts to boost household spending on cars, home appliances, and electronic goods, while targeting consumption in the services sector.
Given the uneven recovery and ongoing challenges in domestic demand, what further steps might be necessary to ensure sustained economic growth in China?