Chinese industrial profits were marginally down at the start of the year, official data showed, as businesses faced an uncertain economic environment. Profits of major industrial enterprises fell 0.3 percent in the first two months of 2025, according to the National Bureau of Statistics That was on the back of three years of substantial reductions but assisted by an improvement in profitability in industry and raw materials.
Mixed Sectoral Performance
The new figures tell an uneven story of Chinese industry. Profits were back in December, rising 11 per cent year-on-year. The expansion had suggested that the stimulus measures the Chinese government began to roll out in late September were beginning to take effect, helping economic activity. But the latest data introduces a bit of uncertainty into that outlook.
There are some sector divergences in the data. Profits at state-owned industrial firms grew by 2.1% in the first two months. There was also strong profit growth for companies with foreign investment, whose combined profits rose by 4.9%. The manufacturing sector reported a 4.8% increase in profits, while the utilities industry — which encompasses the electricity, heat, gas, and water supply — saw profits rising 13.5%. By contrast profits in the mining sector plummeted 25.2% year-on-year.
Shifts in Macroeconomic and Policy Paradigms
According to the statistician, it is beneficial in terms of profitability for linked sectors and via supply chains to retain this policy.
But as the statistician also pointed out, some of the operational challenges persist, particularly against a more difficult international backdrop.
Reaching that is likely to take additional stimulus to compensate for the effect of the higher tariffs on the United States.
Chinese policymakers announced multiple rounds of stimulus measures in the second half of last year. This included, among other things, extensions of a consumer goods trade-in program, aimed at driving demand, and helped the country meet its growth target of “about 5 percent.”
External Factors and Indicators of the Economy
Several financial institutions have revised their forecast of China’s economic growth this year. Such revisions are also comparatively more positive relative to the economic outlook for the country, though risks related to tariffs are acknowledged.
In recent weeks economists at several financial institutions have raised their forecasts for China’s G.D.P. growth. Most beat previous forecasts by a long way, seemingly providing some confidence in the state of the economy, although tariffs continue to loom large.
The latest economic data tell a mixed story. Retail sales were up 4% in the January-February period as compared to the same year-ago period, a faster pace than December. Investment in fixed assets and industrial production also grew more than expected.
But while exports, which had powered China’s G.D.P. last year, are starting to show signs of fading momentum. This may also be because exporters are reduced the pace at which they front-load exports ahead of new tariffs.
The Consumer Price Index dipped into negative territory in February, the first time it had since early last year. This adds to an impression of households biding their time, further startled by an ongoing slump in the property sector.
The national unemployment rate reached 5.4 percent last month — its highest in two years. The urban jobless rate of people 16 to 24 years of age (not students who were not seeking a job) soared to 16.9%, the highest rate in four months.
