Industrial profit growth rate year-on-year increased to 15.2% in January-February, with high-tech manufacturing performing remarkably well.

Ask AI: How can policy ensure that industrial profits continue to improve under external risks?

Reporter: Xin Yuan

The National Bureau of Statistics released data on Friday showing that in the first two months of this year, industrial enterprises above designated size across the country generated total profits of 1,024.56 billion yuan, up 15.2% year on year. The growth rate rebounded by 9.9 percentage points from December last year, and accelerated by 14.6 percentage points compared with the full year of last year.

In a news release, Wei Ning, chief statistician of the Industrial Division of the National Bureau of Statistics, interpreted that overall industrial enterprise profits above designated size are growing relatively fast. However, the international environment is marked by fluctuations and uncertainties, and external risks—especially the spillover risk from geopolitical conflicts—are rising, with many factors that make conditions unstable and uncertain. At the same time, during the domestic economic transition period, the recovery of industry firms’ profits remains uneven. Next, efforts should continue to expand domestic demand, optimize supply, develop new-quality productive forces in light of local conditions, deepen efforts to build a nationwide unified large market, and promote the sustained and healthy development of the industrial economy.

From an industry perspective, most industries saw profit growth, with more than 60% of industries rebounding. According to data from the National Bureau of Statistics, in the first two months, among 41 major industrial categories, profits in 24 industries increased year on year, covering a growth share of 58.5%. Profits in 26 industries accelerated compared with the whole of last year, or narrowed their decline, turning from falling to rising; the rebound coverage exceeded 60%.

The “keystone” role of the equipment manufacturing sector is evident, and the profit structure of industrial enterprises continues to improve. Data show that in the first two months, operating revenue of equipment manufacturing above designated size grew 8.9% year on year, which is 3.6 percentage points higher than that of all industrial enterprises above designated size. Rapid growth in operating revenue drove profits of equipment manufacturing above designated size to rise 23.5% year on year, accelerating by 15.8 percentage points compared with the whole of last year.

In addition, profits of equipment manufacturing above designated size accounted for 30.4% of total profits of all industrial enterprises above designated size, up 2.0 percentage points year on year, with the profit structure continuing to improve. By industry, among the eight industries in equipment manufacturing, five recorded profit growth. Among them, profits in the electronics, rail, ships and aerospace industries, and electrical machinery industries grew relatively quickly, increasing by 203.5%, 11.4%, and 6.2% year on year, respectively.

Profits in high-tech manufacturing grew rapidly, strengthening the leading role. Data show that in the first two months, profits in high-tech manufacturing above designated size increased 58.7% year on year, accelerating by 45.4 percentage points compared with the whole of last year. It pulled up the profits of all industrial enterprises above designated size by 7.9 percentage points, with the contribution strengthening by 5.5 percentage points compared with the whole of last year.

From an industry perspective, in the first two months, intelligent product manufacturing showed positive momentum. Profits in intelligent unmanned aircraft manufacturing, intelligent in-vehicle equipment manufacturing, and other intelligent consumer equipment manufacturing increased by 59.3%, 50.0%, and 31.3%, respectively

The national work conference on industrial and information technology previously convened listed “making every effort to consolidate the steady and positive momentum of the industrial economy” as the top priority for 2026.

At the meeting, Li Lecheng, Minister of the Ministry of Industry and Information Technology, said that this year will focus on four areas of work, including stabilizing growth in key industries and key regions, tapping potential to expand effective demand, promoting value creation and prevailing on quality, and further enhancing the drive and vitality of operating entities.

Looking ahead to the trend of industrial profits, Wen Bin, chief economist at China Minsheng Bank, told Jiemian News that industrial enterprises’ profits are expected to continue the repair trend. On the demand side, domestic consumption is set to grow steadily, investment will gradually stop declining and rebound, and exports are expected to see stable volumes and improved quality, resulting in overall demand remaining steady with improvement. On the price side, under the “anti-involution” policy effect, the rate of decline in prices is narrowing, which has helped ease companies’ cost pressures and further supports profit improvement.

In addition, Wen Bin said that as new industrialization and the building of a modern industrial system accelerate, effective manufacturing investment, demand for equipment upgrades, and needs for technological renovation will continue to be released. The operating environment and profit margins of industrial enterprises are expected to improve gradually, leading industrial enterprises’ profits to transition from a phase of recovery to a steadier, more resilient, mild growth.

The macro research team at Everbright Securities believes that in 2026, a rebound in the readings of industrial producer prices (PPI), together with the policy guidance of “investment stabilizing and then rebounding,” is expected to help companies’ earnings warm up.

Specifically, Everbright Securities noted that on the price front, against the backdrop of globally loose liquidity, as countries rebuild supply chains and compete to accelerate the securing of energy and mineral resource inputs, international bulk commodity prices could be lifted. Domestically, as the “anti-involution” policy is further deepened and capacity utilization rates gradually recover, prices of industrial goods are expected to move up from their low levels. On the quantity front, considering that various policies to stabilize investment are gaining traction and that the year 2025/2026 is the opening year of the “15th Five-Year Plan” and major projects will be concentrated in starting construction, the expansion of investment demand will drive a rebound in industrial production. On the structure front, benefiting from a rebound in PPI readings and investment stabilization, profits in upstream and midstream industries are expected to benefit. Profits in downstream industries are expected to face pressure due to cost increases.