Beijing’s policies ease pressure on manufacturers
China’s industrial sector posted a sharp rebound in September, with profits rising 21.6% compared to the same month last year, according to data released by the National Bureau of Statistics (NBS). The increase marks the strongest growth since November 2023 and follows a 20.4% gain in August, signaling renewed momentum in the sector.
This recovery comes amid Beijing’s efforts to curtail aggressive price wars across industries, a move that helped alleviate downward pressure despite ongoing trade tensions with the United States. Policymakers have prioritized stabilizing corporate earnings as deflation continues to weigh on the producer price index, which fell 2.3% year-over-year in September.
Profit growth uneven across sectors
In the first nine months of 2025, profits at large industrial firms grew 3.2%, accelerating from 0.9% in the January–August period. Manufacturing led the gains, with a 9.9% increase in profits year-over-year. Utility sectors including electricity and water supply also saw growth of 10.3%.
Conversely, the mining industry posted a significant decline, with profits down 29.3% during the same period. High-tech manufacturing stood out as a bright spot, with September profits soaring 26.8%, according to NBS chief statistician Yu Weining.
Ownership structure also influenced results. State-owned enterprises saw a modest 0.3% decline in profits, while foreign-invested firms posted a 4.9% gain. Private companies reported 5.1% profit growth over the January–September period.
Macroeconomic outlook remains mixed
Despite resilient exports and solid industrial output — up 6.5% in September — other indicators reflect persistent challenges in the broader economy. Fixed-asset investment unexpectedly contracted 0.5% in the first nine months, the first such decline since 2020, highlighting weak confidence in sectors like property and infrastructure.
China’s overall GDP growth slowed to 4.8% in the third quarter, the lowest in a year. Consumer prices fell 0.3% in September, underscoring sluggish demand, while housing market weakness and labor uncertainty continue to dampen sentiment.
Policy focus shifts to innovation, not consumption
At a recent economic planning summit, Chinese leaders emphasized industrial upgrading and technological innovation rather than large-scale consumption stimulus. While officials reiterated commitments to expand domestic demand and improve livelihoods, analysts noted these themes received less emphasis than in past meetings.
Louise Loo, head of Asia Economics at Oxford Economics, noted that policymakers “don’t envision large-scale consumption stimulus over the next five years,” citing weak household confidence and a persistent savings overhang.
Nomura economists forecast a slowdown in export growth in the final quarter of 2025 due to rising global trade barriers and a strong performance base from last year. They expect export expansion to moderate after Q3’s 6.6% year-on-year growth.
