Profits of industrial companies in China recorded only limited growth in 2025, as uncertainty stemming from tariff tensions with the United States and broader economic challenges weighed on performance throughout the year.
According to data released by China’s National Bureau of Statistics (NBS), total profits of industrial enterprises with annual revenue exceeding 20 million yuan (approximately $2.88 million) reached 7.39 trillion yuan (around $1.06 trillion) in the January–December 2025 period, marking a 0.6% increase compared with the previous year.
Profitability declined 3.9% among state-owned enterprises, while remaining flat in the private sector. In contrast, profits of foreign-invested companies, including those operating in Hong Kong and Macao Special Administrative Regions, rose 4.2% year-on-year.
First Annual Increase After Three Years of Decline
The modest rise in 2025 marked the first annual increase in industrial profits after three consecutive years of contraction. Profits had fallen 4% in 2022, 2.3% in 2023, and 3.3% in 2024.
Tariff Dispute With the U.S. Weighed on Profitability
Escalating trade tensions between China and the United States, driven by successive tariff hikes, significantly affected industrial profitability during the year.
Industrial profits increased 1.4% in the first four months of 2025. However, following the U.S. announcement of new tariff increases in April, profits declined in May, June, and July, resulting in a 1.7% contraction over the first seven months.
As negotiations between the two countries showed signs of compromise, profitability rebounded. A sharp 20.4% increase in August pushed full-year profits back into positive territory. Profits continued to rise 21.6% in September and 5.5% in October.
Renewed tensions emerged in October after China announced new export restrictions on rare earth elements, a sector in which it dominates global supply. This development led to a 13.1% decline in profits in November.
Following the announcement of a temporary agreement between the U.S. and China, industrial profits rebounded once again, rising 5.3% in December, allowing the sector to close the year on a positive note.
Source: Patronlar Dünyası/ Prepared by: İlayda Gök