📍23.8% Chinese industrial enterprises are operating at a loss in 2025—the highest level since 2000 and double that of 2017, while profit margins have dropped to only 4.5%, the lowest in over a decade and declining for four consecutive years.

📌The PBOC has to inject liquidity, resulting in many zombie companies surviving on credit. Chinese companies are caught in a cycle of oversupply -> low profits -> need for credit -> further oversupply.
📌Overcapacity but stagnant demand forces companies to lower prices and accept thin margins. Domestic competition has turned into a race to the bottom.