China’s Industrial Profits Drop 13.1% in November
hina’s Ministry of Industry expects output from large industrial firms to grow 5.9% in 2025 compared with 2024.
Quick overview
- China's industrial profits fell 13.1% year over year in November, marking a second consecutive monthly decline.
- Despite weak industrial earnings, the Chinese government remains optimistic, projecting a 5.9% growth in industrial output by 2025.
- Domestic demand and deflation are significant challenges affecting corporate profitability, with uneven sector performance observed.
- Geopolitical tensions escalated as China imposed sanctions on U.S. defense companies over an arms deal with Taiwan.
The data were released by Bloomberg. The Chinese government estimates industrial growth of more than 5%.
China’s industrial profits posted a second consecutive monthly decline in November, deepening a negative trend that reflects weakening domestic demand and the persistent effects of deflation. According to official figures released by the National Bureau of Statistics (NBS), industrial earnings fell 13.1% year over year, following a 5.5% decline in October.
Despite these weak results, cumulative profits for the first eleven months of the year edged up just 0.1%. Authorities remain more optimistic about the outlook. China’s Ministry of Industry expects output from large industrial firms to grow 5.9% in 2025 compared with 2024, pointing to a significant rebound relative to current conditions.
Domestic Demand and Deflation Remain Key Drags
The NBS report highlights sluggish domestic demand and ongoing industrial deflation as the main pressures on corporate profitability. The backdrop remains challenging, marked by falling investment, subdued consumer spending, and persistent trade frictions with key partners. While China has maintained a tariff truce with the United States, external conditions continue to weigh on activity.
Sector performance remains uneven. Advanced industries such as aerospace and electronics recorded profit growth of around 5% over the first eleven months of the year, while utility companies managed to stay in positive territory. In contrast, the mining sector posted double-digit declines, reflecting volatility in commodity prices.
Outlook: Limited Stimulus, Growth Risks Persist
Looking ahead, economists expect Chinese authorities to pursue only modest monetary easing and restrained fiscal expansion in 2026. This cautious approach follows the tone set by senior policymakers at the most recent economic policy meeting, where stability was prioritized over aggressive stimulus.
China’s official growth target for 2025, set at around 5%, appears achievable. However, a continued deterioration in industrial profits could weigh on private investment and employment in the coming months.
Geopolitical Tensions Escalate Over Taiwan
Geopolitical tensions intensified on Friday after China imposed sanctions on 20 U.S. defense companies and 10 executives over an arms deal with Taiwan. Measures include freezing assets held in China and banning domestic firms from doing business with the sanctioned entities, according to China’s foreign ministry.
The move follows a U.S.–Taiwan arms agreement worth between $10 billion and $11 billion—the largest in their history—pending approval by the U.S. Congress. Beijing described the deal as a serious provocation, reiterating that Taiwan remains a core national interest and a red line in U.S.–China relations.
Under U.S. law, Washington is obligated to assist Taiwan in its self-defense, a provision that has become an increasingly contentious source of friction amid broader tensions over trade, technology, and human rights.
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