China's industrial profits tumble at fastest pace in over a year

Profits at China's industrial firms in November fell at their fastest pace in over a year, as weak domestic demand offset resilience in exports in another sign of a stuttering economic recovery that backs calls for additional policy stimulus.

Profits fell 13.1 percent year-on-year in November, accelerating from a 5.5 percent drop in October, according to the National Bureau of Statistics (NBS) data released on Saturday. The sharper decline came despite better-than-expected goods exports and against a backdrop of persistent factory-gate deflation, maintaining pressure on policymakers to do more to address chronically soft household consumption.

The profit numbers are consistent with a broader cooling in economic activity in the fourth quarter, mainly due to the drag from soft domestic demand, said Xu Tianchen, senior economist at the Economist Intelligence Unit.

Xu said he remained cautiously optimistic about the outlook for industrial profits.

"Profitability will improve under 'anti-involution'" as firms scale back investment over time, he said, adding that companies could also "earn more profits overseas," albeit "at the cost of their global peers."

For the first 11 months of the year, industrial profits rose 0.1 percent from a year earlier, slowing from 1.9 percent growth in January–October, driven in part by a 47.3 percent plunge in profits at the coal mining and washing industry.

Momentum in the roughly $19 trillion economy eased toward year-end, though authorities have yet to roll out new policy support.

China observers say Beijing is taking some comfort from indicators suggesting that the official 2025 growth target of around 5 percent is still achievable, while a US-China trade truce has also helped ease tensions. However, market expectations centre on the need for further policy support next year to bolster domestic demand and broad economic growth.

Against a volatile and uncertain global backdrop, and amid continued structural adjustment as industry shifts from old to new growth drivers, the recovery in industrial firms' profitability still needs to be put on a firmer footing, NBS Chief Statistician Yu Weining said in an accompanying statement.

China's economy grew by just 2.5 percent to 3 percent in 2025, the Rhodium Group think tank estimates, roughly half the pace implied by official data, driven by a collapse in fixed-asset investment over the second half of the year.