According to figures from the National Bureau of Statistics (NBS), China’s industrial profits bounced back in the first quarter of 2025. Despite persistent trade tensions with the U.S., profits rose by 0.8%, amounting to 1.5 trillion yuan ($205.86 billion). This signifies a recovery from a 0.3% drop in the initial two months of the year.
Growth was mainly fueled by sectors like consumer goods manufacturing. Profits in the wearable smart device industry skyrocketed by 78.8%, while those in household appliances increased by 21.7%. These improvements are mainly due to government initiatives that encourage consumption and innovation in these fields.
Despite the increase in profits, U.S. tariffs are still significantly affecting China’s industrial sector. Washington has escalated tariffs on Chinese products by up to 145%, prompting Beijing to explore other markets. However, numerous export-reliant manufacturers are dealing with soft domestic demand and delayed payments.
Due to government stimulus, China reported stronger-than-anticipated economic growth in the first quarter. However, deflationary forces persist, affecting corporate profits and employees’ wages. The ruling Communist Party has committed to deploying monetary tools and policy financing mechanisms to promote innovation and international trade.
Profits at state-owned enterprises (SOEs) fell by 1.4%, whereas private firms experienced a slight decrease of 0.3%. Conversely, foreign companies operating in China witnessed a 2.8% growth in profits, suggesting that some industries are navigating trade tensions more effectively.
The 0.8% increase in industrial profits is encouraging, yet challenges from U.S. tariffs and global economic pressure continue. The Chinese government is anticipated to unveil additional stimulus measures to bolster growth. The main challenge lies in how effectively these policies will mitigate the effects of rising trade disruptions.
Though the first-quarter profits are a positive indicator, China’s industrial sector will continue to encounter major obstacles. The outlook depends on government policies, the global trade environment, and the ability of industries to adjust to the challenges ahead. Only time will reveal if these efforts lead to sustained growth.