China’s industrial sector recorded its first annual profit increase in four years in 2025, according to official data released on Tuesday. This turnaround follows government initiatives aimed at curbing price wars and other excessive competitive practices, which had been putting strain on businesses. Weak growth in China’s $US19 trillion economy prompted calls for an end to the ‘race to the bottom’ in sectors such as autos and solar panels.
While the decline in producer prices has yet to be halted, an export boom has helped offset weak domestic consumption. In December, profits at industrial firms increased by 5.3 per cent compared to the same month the previous year, reversing a 13.1 per cent year-on-year fall in November, according to data from the National Bureau of Statistics. For the entirety of 2025, profits rose by 0.6 per cent, a notable improvement from the 0.1 per cent increase recorded in the first 11 months, marking the first annual gain in four years.
The auto industry experienced a 0.6 per cent rise in profits last year, a reversal from the 8 per cent decline in 2024, supported by strong exports. Export diversification, moving away from reliance on the US market, cushioned the economy from the impact of US tariffs on Chinese imports. State-owned firms saw a profit decrease of 3.9 per cent last year, while privately run firms’ profits remained flat, and foreign firms recorded a 4.2 per cent gain, the data revealed.
Industrial profit figures encompass firms with annual revenue of at least 20 million yuan ($2.88 million) from their primary operations. These statistics provide a valuable insight into the health and performance of China’s industrial sector, reflecting the impact of government policies and global economic factors.
