Chinese industrial profits in the first quarter of the current year showed readings indicating a return to growth.
At the same time, the media notes that the mentioned positive result is highly likely not to be sustainable and durable in the foreseeable future. In the context of the relevant assumption, attention is drawn to the fact that Chinese industrial profits will come under pressure amid the trade war between China and the United States.
The tariff measures implemented within the framework of the current configuration of Washington’s trade policy, as noted by the media, can become a source of significant impact on the export engine of the Chinese economy, which is currently the second-largest in the world. Recently, rumors have been actively circulating that the United States and an Asian country may conclude a deal to normalize the terms of economic cooperation. Washington is demonstrating appropriate readiness, but it is still not making the first move in this direction. There are also currently no specifics as to when the trade talks between the United States and China will take place. At the same time, there is no guarantee that this negotiation process, which so far is only a potential possibility, will have a positive outcome. It is worth noting that the tariff confrontation will have negative consequences for both Washington and Beijing. In this case, China is facing a narrowing of the space for opportunities to earn on export activities. For the United States, the main risk associated with a trade war is the likely rapid rise in prices. For Washington, this will exacerbate the problem of inflation, which has become a significant challenge for the US economic system in recent years.
According to media reports, there is currently an intensification of expectations among economists and investors that Beijing will take additional support measures aimed at mitigating the impact of the trade war on the Asian country’s economy.
In the first quarter of the current year, the cumulative profits of China’s industrial companies reached 1.5 trillion yuan ($205.86 billion). This indicator showed an increase of 0.8% compared to the reading for the same period in 2024. The relevant information was published last Sunday, April 27, by the National Bureau of Statistics (NBS) of China. It is worth noting that in the first two months of 2025, cumulative profits of industrial companies in the Asian country fell by 0.3% year-on-year. In March, the corresponding figure increased by 2.6% compared to the reading for the same period in 2024.
It is worth noting that last year the cumulative profits of industrial companies in China showed a drop of 3.3%. The figures for the first three months of 2025 reversed the tendency of continuous decline in the mentioned reading since the third quarter of 2024. This was stated by Yu Weining, an NBS statistician.
As a result of a consumer goods trade-in campaign profits in the wearable smart device manufacturing sector of the Asian country in the first quarter of 2025 showed growth of 78.8% year-on-year. The corresponding indicator of Chinese household kitchen appliance makers increased by 21.7% over the mentioned period compared to the reading for January- March 2024.
It is also worth noting that the Asian country’s economy showed growth in the first quarter of the current year, which exceeded preliminary expectations. The corresponding indicator increased by 5.4% compared to the figure for the same period in 2024. The media noted that the mentioned positive result became a reality amid incentives from the Chinese government that boosted consumption and were a significant support factor for investment activity. At the same time, deflationary pressures continue to be felt in the world’s second-largest economy. This factor has become a source of negative impact on corporate profits and workers’ incomes, as companies have tried to navigate the growing trade disruptions.
Yu Weining stated that at the current stage, the external environment is becoming more complex and severe, and unstable and uncertain factors are increasing. It was also noted that the Chinese government will further strengthen policy implementation and promote continuous improvement of corporate profitability.
The media drew attention to the fact that Beijing has recently intensified calls for investors to find local buyers as an alternative to the United States market. Currently, cooperation with the US is actually what can be described as a kind of territory of the impossible for the Asian country. The United States has increased tariffs on goods imported from the Asian country to 145%. As part of the countermeasures, China has decided on 125% levies on products shipped from the US.
According to media reports, in the Asian country, many export-reliant factories have decried weak domestic consumer demand, price wars, low profits, and payment delays in the Chinese market.
It is worth mentioning that last week China’s authorities pledged to support the companies and workers most affected by the current tariff policy configuration of the United States. In this context, it was also noted that new monetary tools and policy financing instruments will be set up to boost innovation, consumption, and foreign trade.
The profits of state-owned Chinese companies in the first quarter of 2025 showed a decrease of 1.4% compared to the figure for the same period in 2024. Private-sector firms in the Asian country also recorded a fall in profits in January-March of the current year. In this case, the indicator decreased by 0.3% year-on-year. At the same time, the profits of foreign companies grew by 2.8% year-on-year in the first quarter of 2025.
It is worth clarifying that industrial profit numbers cover firms which annual revenue from the main operations is at least 20 million yuan.
The major impact of tariffs from the United States on the world’s second-largest economy is expected to be seen in the second quarter of 2025. All data for the first three months of the current year reflect the situation before Washington announced sweeping tariffs against almost all countries in the first half of April.
