In November, the profits of Chinese industrial companies fell at a record pace, marking the largest decline in over a year. This occurred against the backdrop of weak domestic demand, which overshadowed positive export figures, indicating a slowing economic recovery and raising questions about the need for additional stimulus measures.
According to statistics provided by the National Bureau of Statistics (NBS) on Saturday, profits in November decreased by 13.1% compared to the same period last year, significantly worsening from 5.5% in October. This sharp decline occurred despite stronger-than-expected export data and ongoing deflation at the factory gate, which continues to pressure policymakers to activate measures to support consumer demand, which remains chronically low.
According to Xu Tianchen, a senior economist at the Economist Intelligence Unit, the profit data reflects a general slowdown in economic activity in the fourth quarter, primarily driven by weak domestic demand. He also expressed cautious optimism about future prospects for the industrial sector, noting that "profitability may improve in a context of 'anti-involution,' where companies begin to cut investments and at the same time may 'earn more abroad,' although this may come at the expense of competition in the global market.
Throughout the first 11 months of the current year, industrial profits grew by only 0.1% compared to the same period last year, significantly lower than the 1.9% growth recorded in January-October. One reason for this slowdown is the 47.3% drop in profits in the coal mining and coal processing industries.
By the end of the year, economic activity, estimated at around $19 trillion, continues to weaken, while authorities have yet to implement new support measures.
Experts emphasize that Beijing finds some hope in indicators suggesting the achievability of the official growth target of 5% for 2025, as well as in the truce in trade with the U.S., which has helped reduce tensions. However, the market expects that additional policy support will be needed next year to stimulate domestic demand and overall economic growth.
The chief statistician of the NBS, Yu Weining, stated that the recovery of industrial profitability requires a more solid foundation, given the unstable global situation and ongoing structural adjustments as industries transition to new sources of growth.
According to estimates by the Rhodium Group, China's economic growth in 2025 will be only 2.5–3%, which is almost half of the official forecasts, primarily due to a significant reduction in fixed asset investments in the second half of the year.
Among the sectors, the automotive industry showed a profit growth of 7.5%, which is an improvement of 3.1 percentage points compared to January-October. High-tech manufacturing also showed positive results: profit growth was 10.0% year-on-year, which is 2.0 percentage points higher than in previous months, according to NBS data.
At a recent policy prioritization meeting, officials reaffirmed their commitment to maintaining a "proactive" fiscal policy next year aimed at stimulating consumption and investment. Additionally, the government reiterated its readiness to support employment, increase household consumption, revive prices, and stabilize the real estate market, which remains in a prolonged state of stagnation.
Profit data covers enterprises with annual revenues of at least 20 million yuan ($2.85 million) from core operations.
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
