China industrial profits soar most since 2023 as price wars ease

BEIJING – Profits at Chinese industrial enterprises increased the most in nearly two years, as production revved up while declines in factory-gate prices eased amid a government campaign to rein in excess capacity. 

Industrial profits gained for the second straight month in September and rose 21.6 per cent from a year earlier, their biggest gain since November 2023. That was far better than a Bloomberg Economics forecast for a 3.9 per cent gain and followed a 20.4 per cent jump in August. 

For the first nine months of 2025, profits were up 3.2 per cent, according to data released on Oct 27 by the National Bureau of Statistics (NBS).

Faster expansion in output is propping up earnings of Chinese factories and mines, as foreign demand remained robust despite US tariffs. Price declines also slowed in recent months, with the government acting to curb overcapacity and cut-throat competition.

That said, the actual strength of the recovery appears fragile for now, given a low comparison base in 2024. NBS analyst Yu Weining said in a separate statement the figures were evidence that China has “implemented more active and promising macro policies, cultivated and expanded new economic growth points”.

“New quality productive forces including high-tech manufacturing and equipment manufacturing industries grew rapidly,” said Mr Yu, adding that profit growth continued to recover thanks in part to the statistical effect of a low base in 2024. 

Industrial profits posted deep declines in the four consecutive months through November 2024 when economic growth cooled rapidly, which eventually forced policymakers to respond with a package of stimulus measures.

As China heads into the final months of 2025, signs have emerged that momentum is improving. Surveys by the People’s Bank of China (PBOC) found that loan demand from companies increased last quarter and the indicator of business conditions rose slightly. 

But while the export orders index in a separate poll of companies climbed from the prior three months, a measure of domestic orders deteriorated. The indexes for raw materials purchasing prices and sales prices both gained in the third quarter, “hinting at government’s ‘anti-involution’ efforts at play”, according to Goldman Sachs Group.

The outlook was far less upbeat among households, another PBOC survey showed, as people turned more negative about employment and became less willing to consume. The central bank surveyed 20,000 bank depositors in 50 cities across the country, about 3,200 banks and over 5,000 companies for the surveys.

Domestic demand has stayed stubbornly weak as investment shrank and the outlook for jobs remains gloomy, casting doubt on whether the earnings improvement can last.

In a communique released on Oct 23 after a key meeting, the ruling Communist Party pledged to “firmly achieve” 2025’s economic growth target with a focus on stabilising employment, companies, markets, and expectations. 

Macro policies should continue to deliver support for the economy and could be stepped up if necessary, it added.

Over the past month, the Chinese authorities have already announced additional funding support worth a combined one trillion yuan (S$182 billion) to ramp up investment and strengthen local government finances. BLOOMBERG