China's Industrial Profits Plunge in November Amid Weak Demand and Policy Tightening
Headline overview
China’s industrial profits plunged sharply in November, wiping out much of 2025’s modest gains as weak domestic demand and persistent factory‑gate deflation weighed on margins and output. Recent data showed a double‑digit year‑on‑year drop that contrasted with resilient export figures but underscored cooling momentum at home.
Drivers and policy context
The downturn reflects soft household consumption, overcapacity in heavy industries and falling prices that compress returns for manufacturers; coal and other legacy sectors drove large swings even as some firms seek overseas markets to sustain earnings. Beijing is responding by tightening controls on over‑investment while signalling targeted support to stabilise growth, leaving markets to watch for fiscal or credit measures aimed at boosting consumption and rebalancing industry toward higher‑value sectors.
Outlook
Recovery hinges on stronger domestic spending, effective policy stimulus and faster industrial upgrading to restore profitability and confidence into 2026.
