China’s industrial firms reported a substantial rebound in profits in September 2025, with a 21.6% year-on-year rise, the fastest pace since November 2023. The increase follows a 20.4% gain in August and brings first nine-month profits up by 3.2%, compared with just 0.9% for the January–August period.
What’s Driving the Jump
The profit uptick was primarily powered by high-tech manufacturing and equipment-machinery sectors, where output and export orders remain relatively strong. In addition, a low base from the same period last year helped amplify the year-on-year gain.
Government measures to curb aggressive price competition in sectors with excess capacity also played a role in stabilising margins and reducing downside pressure on profits.
But It’s Not All Smooth
Despite the strong headline numbers, analysts remain cautious. They point out that domestic demand—particularly consumer spending and investment—remains weak. For example, one major traditional-medicine firm logged a 28.8% drop in quarterly profits amid falling discretionary sales. Export strength and manufacturing output are masking underlying softness in other parts of the economy.
Policy Implications
The data provides a welcome signal for Beijing as it pushes for industrial modernisation and technological self-reliance. However, sustaining this momentum will likely require stronger revival of domestic consumption and investment, and continued policy support amid external headwinds such as trade tensions with the U.S.
The Outlook
While September’s profit surge is encouraging, economists suggest treating it “with a grain of salt.” The recovery remains uneven and hinges on whether companies can translate improved factory earnings into broader economic strength.
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