China’s Industrial Profits Rise Sharply in Q1 with 3-Year High Margin

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China’s industrial profits experienced a notable acceleration in the first quarter, marking the highest profit margins on operating revenue in three years. This uptick is attributed to the implementation and effectiveness of more proactive economic policies.

Companies with annual revenues of at least CNY20 million (approximately USD2.9 million) saw their profits increase by 15.5% in the first three months of the year compared to the same period last year, with March alone contributing a 15.8% rise. During the first two months, the growth rate stood at 15.2%.

The profit margin on operating revenue for these firms reached 5.1%, up from 4.7% a year earlier. Experts note that these figures reflect a positive cycle in the industrial sector, characterized by increased output, stable prices, and improved quality. Supportive policies—such as tax and fee reductions, better financing conditions, and measures to stimulate domestic demand—have all contributed to expanding profit margins.

This strong start to the year aligns with the current phase of economic development, during which external demand remains relatively supportive, domestic demand is gradually recovering, and prices are steadily rebounding. However, analysts caution that maintaining this momentum will depend on how internal and external conditions evolve.

External uncertainties continue to pose challenges, especially given the ongoing imbalance between high supply levels and weak domestic demand, according to the chief statistician of the industrial department at the national bureau.

Efforts moving forward will focus on stabilizing the economy while promoting progress, improving quality and efficiency, and fostering meaningful improvements in the industrial sector. These strategies aim to strengthen the foundation for sustained positive performance among manufacturing enterprises.

High-tech manufacturing profits, particularly among larger firms, surged more than 47% during the first quarter, accounting for nearly 8 percentage points of the overall industrial profit increase. Rapid growth was especially evident in the artificial intelligence and semiconductor sectors, with profits at fiber optic, optoelectronic, and display manufacturing companies rising by 337%, 43%, and 36%, respectively.

This robust growth among high-tech firms, especially in electronics and communications equipment, indicates that industrial upgrading and the emergence of new, quality-driven productive forces are accelerating faster than before. Experts believe that technological advancements are increasingly replacing the older growth models heavily reliant on resource-intensive inputs.