Challenges mount as industrial profits slip

China's industrial profits slipped in the first two months of 2025, signaling a challenging period ahead for businesses as they navigate persistent deflationary forces and an escalating trade war with the United States.

The economy got off to an uneven start this year, as retail sales growth accelerated while consumer and producer prices contracted and exports remained sluggish, maintaining pressure on policymakers to ramp up stimulus.

Industrial profits fell 0.3 percent in the January-February period from the same period last year, according to data released by the National Bureau of Statistics (NBS). This compared with an 11 percent increase in earnings in December.

China combines the profits data for January and February to smooth out the impact of the week-long Lunar New Year holiday, the timing for which changes each year.

Highlighting a tortuous post-Covid recovery, industrial profits slid 3.3 percent for the whole of 2024, the third straight year of contraction.

"The external environment has become more complex and severe with an increase in unstable and uncertain factors, and some industrial enterprises are still facing a lot of difficulties in their production and operation," said NBS statistician Yu Weining.

Reuters