China’s Factories Flip to Profit After Three-Year Slide

BEIJING—China’s industrial profits eked out a 0.6% gain in 2025, halting three straight years of contraction and signaling tentative relief from brutal price competition, according to data from the CNBC reporting on National Bureau of Statistics figures. Total profits for major firms—those with annual revenue above 20 million yuan—reached nearly 7.4 trillion yuan, or about $1.06 trillion.

The turnaround accelerated in December with a 5.3% year-over-year surge, the strongest since September’s 21.6% jump and a sharp rebound from November’s 13.1% plunge, per the Reuters analysis of NBS data. Factory activity snapped an eight-month contraction streak amid Lunar New Year stockpiling, though uneven gains exposed persistent strains from weak home demand.

Beijing’s ‘anti-involution’ campaign—targeting cutthroat price slashing in sectors like electric vehicles and solar—played a pivotal role, alongside export pushes amid a U.S. trade truce. “Progress in Beijing’s ‘anti-involution’ push may improve conditions over time,” said Lynn Song, chief Greater China economist at ING, as quoted in CNBC .

High-Tech Surge Powers Modest Rebound

Equipment manufacturing led with 7.7% profit growth, contributing 2.8 percentage points to the total and claiming 39.8% of overall profits, according to Xinhua . High-tech manufacturing soared 13.3%, outpacing the average by 12.7 points, with unmanned aerial vehicles up 102% and intelligent in-car appliances rising 88.8%.

Yu Weining, chief statistician at the NBS, credited “new growth drivers such as equipment and high-tech manufacturing,” as cited in CNBC . Electronics manufacturing profits climbed 19.5%, ferrous metals 22.6%, per the same report. Yet mining cratered 26.2%, coal mining 41.8%, and oil-gas extraction 18.7%.

“With the implementation of more proactive and effective macro policies last year, China sped up new industrialization,” Yu stated in Xinhua , highlighting structural shifts from scale to quality-driven output.

Sector Splits Reveal Divergent Fortunes

Manufacturing profits rose 5% to 5.69 trillion yuan, utilities 9.4% to 872.1 billion yuan, while overall operating revenue hit 139.2 trillion yuan, up 1.1%, from CNBC . Autos eked out 0.6% growth after an 8% drop in 2024, buoyed by exports, noted Reuters .

Ownership divides sharpened: state-owned enterprises fell 3.9%, private firms flat, foreign-invested (including Hong Kong, Macau, Taiwan) up 4.2%, mirroring January-November trends from NBS via NBS where foreign firms gained 2.4% and state 1.6% down.

Tianchen Xu, senior economist at the Economist Intelligence Unit, pointed to policy curbs on price wars and overseas expansion as key, per CNBC . Small and medium enterprises reversed declines with 1.4% growth, added Xinhua .

Price Wars Tamed, But Domestic Drag Persists

Producer prices turned positive month-on-month for three months from October, with rebounds in photovoltaics and batteries after September bottoms, thanks to capacity controls in cement and EVs, from Xinhua . Yet retail sales lagged at 3.7% versus 5.9% industrial output, underscoring consumption weakness.

“The impact of changes in the external environment is gradually deepening,” Yu warned in Reuters . Commerce Ministry official Yang Mu pledged boosts for car, appliance, and services spending, via CNBC .

Exports offset U.S. tariffs via diversification, aiding the 5% GDP target hit, but property slumps and overcapacity loom for 2026, analysts note across reports.

Policy Pivots Shape 2026 Path

Beijing’s July 2024 directives and December 2025 economic conference emphasized curbing involution, with effects set to deepen. “Efforts must be made to advance the deep integration of scientific and technological innovation,” Yu urged in Xinhua .

Challenges persist: November’s 13.1% drop highlighted volatility, per prior NBS data. Foreign firms’ edge suggests globalization buffers, but state sector woes signal reform needs.

For insiders tracking Beijing’s industrial pivot, the 0.6% uptick marks a fragile win, hinging on sustained high-tech momentum and demand revival amid global trade flux.