China Industrial Profit Growth Accelerates in April Despite US-China Tariff Pressures

China's industrial profit growth continued to accelerate in April, buoyed by government policy support despite rising US tariffs and persistent deflationary headwinds. The positive trend highlights the resilience of Chinese manufacturing and the effectiveness of Beijing's measures to support the private sector.

According to data released by the National Bureau of Statistics (NBS) on Tuesday, total profits at major industrial firms rose 3% year-on-year in April, up from 2.6% in March. For the first four months of 2025, China’s industrial profits increased by 1.4% compared to the same period in 2024.

Beijing’s Policy Support Cushions Impact of US-China Tariffs

The profit recovery comes amid escalating US-China trade tensions, with President Donald Trump imposing tariffs as high as 145% on Chinese imports last month. In response, China retaliated, leading to a near trade freeze between the world's two largest economies.

Despite this, China’s exports remained largely stable as firms diversified into other global markets. Earlier in May, Washington and Beijing reached a deal to reduce tariffs, following talks in Geneva. US tariffs now average 51.1%, while China’s levies stand at 32.6%, according to the Peterson Institute for International Economics.

High-Tech and Equipment Manufacturing Lead the Recovery

Among the sectors leading the rebound, high-tech manufacturing profits surged 9% year-on-year from January to April, with notable gains in biopharmaceuticals and aircraft manufacturing.

The home appliance sector also benefited from a government subsidy program encouraging consumers to replace old electronics, leading to a 15% year-on-year profit increase.

Private Enterprises in China See Profit Gains

Private enterprises recorded a 4.3% rise in profits.

Foreign-invested companies posted a 2.5% increase.

In contrast, state-owned industrial firms saw a 4.4% drop in profits during the same period.

According to Lynn Song, Chief Economist for Greater China at ING, the April data is “encouraging,” indicating that Chinese manufacturers have managed to improve profitability despite a “more challenging external environment.”

Certain Sectors Still Face Strong Headwinds

Not all sectors shared in the recovery. The auto industry saw profits fall 5.1% year-on-year, weighed down by intense price competition. The textile and apparel industry posted a steep 12.7% decline, likely due to demand shifts following tariff hikes.

Meanwhile, the mining sector suffered a 26.8% drop, while manufacturing and utilities (electricity, gas, water supply) grew 8.6% and 4.4%, respectively.

Industrial Output Expands While Consumer Spending Slows

April also saw a robust 6.1% increase in industrial output, reflecting ongoing strength in manufacturing. However, retail sales growth slowed to 5.1%, highlighting a continuing imbalance between supply and demand in the Chinese economy.

Conclusion: Industrial Profit Growth Signals Manufacturing Resilience

Following consecutive declines since Q3 2024, China’s industrial profit growth resumed in Q1 2025 with a 0.8% year-on-year increase, and continued momentum into April.

According to NBS statistician Weining Yu, the rebound reflects the industrial sector’s “resilience and ability to withstand shocks,” though challenges like “insufficient demand, falling prices, and external uncertainty” remain high.

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Source: CNBC