According to NBS information, the decline in profits occurred even despite better-than-expected exports of goods and ongoing deflation at the factory gate prices. This creates pressure on the authorities, forcing them to intensify support for weak consumer demand. As noted by Xu Tiancheng, a senior economist at the Economist Intelligence Unit, this data reflects a general cooling of economic activity in the fourth quarter, primarily caused by weak domestic demand. Nevertheless, he maintains cautious optimism and believes that corporate profits may improve in an "anti-involution" environment, where companies gradually reduce investments and can also gain more profits at the expense of international competitors.
In the first 11 months of the current year, industrial profits increased by only 0.1% compared to last year, significantly lower than the growth of 1.9% in January-October, partly due to a sharp decline of 47.3% in the coal and coal processing industries.
By the end of the year, the economic momentum of the $19 trillion economy weakened; however, the authorities have not yet taken any new support measures.
Experts note that Beijing may draw optimism from indicators suggesting that the official target growth of around 5% for 2025 remains achievable, and the temporary cessation of trade tensions with the U.S. has also had a positive impact. However, market expectations emphasize the need for further policy support to stimulate domestic demand and overall economic growth next year.
In the context of an unstable global situation and ongoing structural adjustments, as industries shift from old models to new sources of growth, restoring profitability in industrial enterprises requires a more sustainable foundation, noted NBS chief statistician Yu Weining in his statement.
According to estimates by the Rhodium Group, China's economy is expected to grow by only 2.5-3% in 2025, which is half of the official forecasts, primarily due to a sharp decline in fixed asset investments in the second half of the year.
By sectors, the automotive industry showed a profit increase of 7.5%, which is 3.1 percentage points higher than the figures for January-October. High-tech manufacturing also contributed positively with a profit growth of 10.0% year-on-year, which is 2.0 percentage points higher than the previous period, according to NBS data.
At a recent policy prioritization meeting, officials reaffirmed their commitment to a "proactive" fiscal policy next year to stimulate consumption and investment. The government has also repeatedly stated the need to support employment, increase household consumption, revive prices, and stabilize the real estate market, which continues to be in a state of stagnation.
Profit data covers enterprises with annual revenues of at least 20 million yuan ($2.85 million) from their main activities.
Source: https://www.reuters.com/world/asia-pacific/chinas-industrial-profits-tumble-fastest-pace-over-year-2025-12-27/#:~:text=The government has also repeatedly,million
