China industrial profits surge 15% to start year

Source Credit : Portfolio Prints

China’s industrial firms reported a strong rebound in profits during the first two months of the year, as policymakers intensified efforts to offset the impact of industrial overcapacity and weak consumer demand.

According to data released Friday by the National Bureau of Statistics (NBS), industrial profits rose 15.2% year-on-year in January–February, building on a 5.3% increase recorded in December.

NBS chief statistician Yu Weining attributed the sharp growth to faster factory activity and improving product prices early in the year.

High-tech manufacturing was the primary driver of this surge, with profits in the sector jumping 58.7% compared to a year earlier. The gains were fueled by strong performance in industries such as unmanned aerial vehicles and semiconductors.

Upstream industries also saw notable growth. Profits among non-ferrous metal producers surged 148.2%, while chemical manufacturers recorded a 35.9% increase.

However, Yu cautioned that rising geopolitical tensions could pose risks to China’s economic outlook, noting that the recovery remains uneven across sectors.

For 2025 as a whole, China’s industrial profits edged up 0.6% year-on-year, ending three consecutive years of decline. The improvement was supported by measures to curb aggressive price competition and a stronger push by firms to expand exports amid global demand.

Meanwhile, authorities have been working to manage the economic fallout from disruptions in Middle Eastern oil supplies. The closure of the Strait of Hormuz—a vital artery for global energy shipments—has unsettled markets and driven up oil prices.

In response, China recently raised retail gasoline and diesel price caps, though the increases were limited to roughly half the usual adjustment to soften the burden on consumers.

Despite rising energy costs, the impact on China is expected to be more contained than in many other economies, thanks to its large oil reserves and diversified energy mix. Additionally, Iran has continued supplying significant volumes of crude oil to China since the conflict began.