May
Profits of Chinese industrial companies rebounded in April, driven by a government-backed replacement program that boosted demand for locally made products despite new U.S. tariffs. According to the National Bureau of Statistics (NBS), industrial profits rose 3% year-on-year in April, exceeding the 2.6% increase in March. For the first four months of 2025, cumulative profits rose 1.4% compared to the same period last year.
Business Confidence on the Mend
This profit rebound is vital for restoring business confidence and reviving hiring and production expansion. In April, amid tightening trade tensions, Chinese exporters redirected shipments to alternative markets. This occurred after the U.S. raised tariffs up to 145%, before reaching a 90-day truce in early May.
“The industrial sector showed steady recovery in the first four months, demonstrating strong adaptability to external shocks,” said NBS analyst Yu Weining.
Moderate Stimulus Amid Improved Results
This robust performance may ease pressure on Beijing to launch new stimulus measures, favoring a more measured macroeconomic stance. The data comes shortly after the recent trade ceasefire between China and the U.S., and reflects an economy more resilient than expected.
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Industrial firms continue to benefit from state subsidies to renew machinery and consumer goods. This spurred investment in tools and equipment between January and April, marking the strongest growth in over four years.
High-Tech Manufacturing
According to Bloomberg Economics, sectors linked to artificial intelligence and high technology outperformed expectations, even amid challenges for export-oriented industries. Manufacturing led profit growth once again, rising 8.6% from January to April, while mining dropped 26.8% and utilities rose 4.4%.
Among standout sectors, semiconductor production doubled its year-on-year profits. The equipment manufacturing segment contributed 0.9 percentage points to the overall industrial profit increase.
Margins and Prices
However, Yu warned of global risks, weak domestic demand, and deflationary pressures. Monthly profit growth is lagging behind industrial output, and revenues are not keeping pace with rising operational costs. Total profits from January to April reached 2.1 trillion yuan ($292 billion), still 20% below 2021 and 2022 levels.
Focus on Business Innovation
Beijing is reinforcing its call to boost competitiveness and innovation to ensure economic security and optimize supply chains. A new State Council plan urges firms to focus on core competencies, avoid scattered expansions, and enhance innovation incentives.
Strategic Global Leadership
The document also calls for better integration between corporate structures and Communist Party organizations. During the 20th Party Congress in 2022, President Xi Jinping stressed the urgency of corporate governance reforms. While some companies have gained global presence, many still face challenges in efficiency, branding, and innovation.
To achieve true economic sovereignty, the report advocates for greater investment in key technologies and strategic control over critical segments of the supply chain.
