China's industrial companies experienced a faster increase in profits in April 2025, driven by a government-led trade-in program that boosted demand for manufactured goods, even as they faced pressure from higher U.S. tariffs.

According to data from the National Bureau of Statistics (NBS), as reported by Bloomberg on Tuesday, May 27, 2025, industrial profits rose by 3% year-on-year in April, improving from a 2.6% increase in March. For the January–April period, industrial profits grew by 1.4% compared to the same period last year.

Exports in April remained under strain as Chinese exporters shifted focus to alternative markets following a steep increase in U.S. tariffs—reaching as high as 145% before a 90-day suspension period was announced.

The manufacturing sector continued to lead profit gains among industrial enterprises. NBS data showed that manufacturing profits rose by 8.6% in the first four months of 2025, in contrast to a 26.8% decline in the mining sector and a 4.4% increase in the utilities sector.

However, profit margins for industrial firms remain under pressure due to intense price competition and ongoing deflation risks. Monthly profit growth still lags behind the expansion of industrial output, according to NBS figures. Furthermore, the rise in operating profits over the January–April period has not kept pace with increases in operational costs.

Stronger profit performance is seen as critical to boosting business confidence, which could, in turn, encourage more investment and hiring. Bloomberg Economics had previously forecast a 1.5% year-on-year decline in April’s industrial profits.

Improved corporate balance sheets could lessen the urgency for Beijing to introduce further stimulus measures to achieve its annual growth target of around 5%. A more measured policy approach is becoming increasingly likely following the recent trade truce between China and the U.S. and emerging signs of resilience in the world’s second-largest economy.

Chinese industrial firms have benefited from government subsidies aimed at encouraging businesses and households to upgrade or replace equipment and consumer goods. As a result, investment growth in machinery and equipment purchases surged in the first four months of 2025, reaching its highest level in over four years, likely contributing to stronger demand for industrial products.