Following a three-year downturn, China’s industrial sector has returned to profitability, posting a 0.6% increase in profits for 2025.The rebound, fueled by a surge in manufacturing and high-tech industries, signals a potential stabilization in the world’s second-largest economy following a period of economic uncertainty[[1]]. Recent data from the National bureau of statistics indicates that key sectors are benefiting from government modernization efforts and a focus on high-value production.
Industrial Profits Rise in 2025, Driven by New Growth Engines
Emerging Sectors Play a Significant Role in Supporting Growth
Nationwide, industrial enterprises with annual revenue above a designated threshold reported a 0.6% increase in profits compared to the previous year. This marks a significant turnaround for the sector, which has faced headwinds in recent years. Manufacturing led the recovery, with a robust 5.0% profit increase – a substantial improvement of 8.9 percentage points over 2024. The power, heat, gas, and water production and supply sector also saw strong gains, rising 9.4%, while the mining industry experienced a 26.2% decline.
December data showed a particularly strong rebound, with industrial profits increasing 5.3% for the month, a jump of 18.4 percentage points from the 13.1% decrease recorded in November. This positive momentum suggests a strengthening trend heading into the new year.
The equipment manufacturing sector was a key driver of the overall improvement, contributing 2.8 percentage points to the total profit growth of large-scale industrial enterprises. It now accounts for 39.8% of all industrial profits, up 2.6 percentage points year-over-year, demonstrating its increasing importance to the industrial economy. Seven out of eight major equipment manufacturing industries reported profit increases, with the railway, shipbuilding, aerospace, and electronics sectors experiencing double-digit growth, rising 31.2% and 19.5% respectively.
High-tech manufacturing also fueled the positive trend, with profits increasing 13.3% – 12.7 percentage points higher than the overall industrial average. Innovation in key areas drove these gains. For example, the intelligent consumer electronics sector saw a 48.0% profit increase, boosted by strong demand for smart devices, including a 102.0% surge in profits for smart drone manufacturers and an 88.8% increase for smart automotive equipment producers. The semiconductor industry also experienced rapid growth, with integrated circuit manufacturing, semiconductor equipment, electronic components, and sensor manufacturing profits rising 172.6%, 128.0%, 49.1%, and 33.3% respectively.
Traditional industries are also undergoing upgrades, contributing to the overall growth. New productivity forces within these sectors are gaining momentum, with profits exceeding industry averages. For instance, profits in biochemical pesticide and microbial pesticide manufacturing rose 20.7% and 15.2% respectively, exceeding the chemical industry average by 28.0 and 22.5 percentage points. Similarly, bio-based chemical fiber manufacturing and biomass power generation saw profit increases of 88.6% and 47.9%, significantly outpacing their respective industry averages.
Profitability also improved across different types of businesses. Small and medium-sized enterprises, as well as foreign-invested enterprises, all saw their profit growth turn positive in 2025, increasing 1.4% and 4.2% respectively, a marked improvement from the declines experienced in 2024. Joint-stock companies and state-controlled enterprises also showed improved performance, with profit declines narrowing by 3.5 and 0.7 percentage points, respectively.
Overall, the return to profit growth for China’s industrial sector, coupled with the strong performance of emerging industries, points to a positive trajectory for the economy. However, challenges remain, including a volatile external environment and the ongoing process of industrial transformation. Continued investment in technological innovation, structural optimization, and the development of new productivity forces will be crucial to sustaining this momentum and driving further improvements in industrial enterprise profitability. Source: National Bureau of Statistics of China website
