China's large industrial firms recorded a modest recovery in 2025, with aggregate profits rising 0.6% to 73,982.0 billion yuan, according to National Bureau of Statistics (NBS) figures. The increase breaks a three‑year streak of declines, but the headline gain masks a sharp divergence between rising high‑value manufacturing and a severe contraction in commodity extraction.
Manufacturing proved the engine of the turnaround, delivering a 5.0% profit gain and accounting for the lion's share of total industrial earnings at 56,915.7 billion yuan. Within manufacturing, equipment makers and high‑technology producers led the advance: profits in the broader equipment manufacturing sector rose 7.7% and now constitute nearly 40% of industrial profits, while high‑tech manufacturing posted a 13.3% jump, driven by strong returns in smart electronics, semiconductors and advanced medical products.
By contrast, mining profits slid 26.2% to 8,345.1 billion yuan, with particularly acute losses in coal and hydrocarbons: coal extraction profits plunged 41.8% and oil and natural gas extraction dropped 18.7%. These declines reflect a combination of weaker commodity prices, reduced upstream margins and the ongoing structural rebalancing away from resource‑intensive activity.
Ownership and regional patterns were mixed. State‑controlled enterprises saw profits fall 3.9%, while joint‑stock firms were essentially flat and private firms’ profits held steady year‑on‑year. Notably, foreign and Hong Kong/Macau/Taiwan‑invested companies posted a 4.2% rise in profits, signalling that outward investment confidence and export‑facing niches remain resilient.
Top‑line activity was subdued: operating revenue across large industrial firms rose just 1.1% to 139.20 trillion yuan, with operating costs rising slightly faster at 1.3%, leaving the operating profit margin essentially unchanged at 5.31%. Balance sheets expanded modestly — total assets grew 4.3% to 188.41 trillion yuan and liabilities rose 4.2% — while receivables and inventories increased, hinting at demand fragility and slower cash conversion cycles.
The NBS highlighted policy support and “new‑type industrialization” as factors behind the rebound, crediting innovation and sectoral upgrading for the improvement. That narrative is borne out in the data: semiconductors, intelligent devices and aerospace‑linked segments saw double‑ or triple‑digit profit gains in parts of the supply chain, underlining how China’s industrial strategy is moving up the value chain.
Despite the recovery in December — profits were up 5.3% year‑on‑year for the month, a notable improvement from November — risks persist. External demand uncertainty, the uneven pace of domestic demand recovery, and the painful adjustment of old heavy industries mean the rebound is tentative. Higher accounts receivable and longer inventory turnover suggest firms are stretching credit lines to sustain sales, which could raise financial vulnerability if demand softens.
For international audiences, the takeaway is twofold: China is making measurable progress in reshaping its industrial base toward higher‑value, technology‑intensive production, improving the competitiveness of sectors that matter for global supply chains; but the economy still carries exposure to commodity swings and legacy sectors that can drag on aggregate performance. How Beijing balances continued support for innovation with healthy market discipline in declining sectors will shape the next phase of China’s industrial trajectory.