An employee works on high-end yarn at a company in Zaozhuang, East China's Shandong Province on December 15, 2024. China's manufacturing sector registered accelerated expansion in November at 50.3, up from 50.1 in October thanks to government policy support, data from the National Bureau of Statistics showed. Photo: VCG

The profit decline of China's major industrial firms narrowed in June compared with May, with emerging sectors led by equipment manufacturing posting solid growth, the National Bureau of Statistics (NBS) said on Sunday.

According to the NBS, the revenue of major industrial enterprises rose 1.0 percent year-on-year last month, maintaining the same pace as in May and providing favourable conditions for a profit recovery.

Total profits came in at 715.58 billion yuan ($98.9 billion) in June, down 4.3 percent year-on-year, but the drop narrowed by 4.8 percentage points from May. Notably, the manufacturing sector saw a marked improvement, with profits reversing from a 4.1 percent decline in May to a 1.4 percent increase in June.

In the first half of the year, the revenue of China's major industrial firms rose 2.5 percent year-on-year, while profits declined by 1.8 percent.

Bian Yongzu, the executive deputy editor-in-chief of Modernization of Management magazine, told the Global Times on Sunday that China's industrial sector is showing signs of a recovery, with profitability gradually improving. He attributed the rebound in part to recent government measures to curb disorderly competition, which helped ease margin pressure and stabilize market expectations.

He noted that the rollout of "anti-involution" policies has curbed damaging price wars in some segments, allowing companies to regain breathing room. "As profits recover, more firms are resuming investment in R&D and technological upgrades, which will strengthen long-term growth momentum," Bian said.

The equipment manufacturing sector saw strong growth in June, providing key support to overall industrial profits. Revenue in the sector rose 7.0 percent year-on-year, up 0.3 percentage points from May, while profits jumped 9.6 percent, reversing a 2.9 percent decline in the previous month. The sector contributed 3.8 percentage points to the profit growth of all major industrial firms, underscoring its strong support, the NBS said.

Among the eight sub-sectors within equipment manufacturing, four recorded profit growth. The auto industry led the gains, with profits surging 96.8 percent on the back of strong sales driven by promotional campaigns and increased investment income from major firms. Profits in electrical machinery, instrumentation and metal products rose by 18.7 percent, 12.3 percent and 6.2 percent, respectively.

High-end, smart and green manufacturing sectors maintained strong momentum in June, with robust profit growth supporting industrial upgrading, the NBS said.

In the high-end segment, profits in electronic-grade materials surged 68.1 percent, while profits of aircraft equipment firms rose 19.0 percent and those of marine equipment makers were up by 17.8 percent.

Faster adoption of intelligent and automated production drove gains in smart consumer devices and precision instruments, up 40.9 percent and 12.5 percent.

Green sectors also performed well, with profits in lithium-ion batteries up 72.8 percent, biomass power generation 24.5 percent and environmental monitoring instruments 22.2 percent.

China's "two new" policies, which focus on equipment upgrades and consumer goods trade-ins, continued to show results in June, as expanded subsidies drove notable profit growth across related industries, according to the NBS.

Under the equipment renewal initiative, profits in medical devices, specialized machinery for pharmaceuticals and daily goods, and general components rose by 12.1 percent, 10.5 percent, and 9.5 percent, respectively.

Trade-in policies for electronics and home appliances also proved effective. Profits in drone manufacturing surged 160 percent, computers 97.2 percent, air conditioners 21 percent, and ventilation appliances 9.7 percent. Upstream sectors such as optoelectronic components saw a gain of 29.6 percent, and computer parts gained 16.9 percent.

Bian highlighted strong growth in green and intelligent industries. He said that sectors such as drones and clean energy are experiencing rapid profit gains, thanks to China's complete industrial system and growing innovation strength. External uncertainties, rather than weakening these firms, have in some cases amplified their global competitiveness.

He also pointed to rising domestic demand for smart, eco-friendly products - ranging from intelligent appliances to consumer drones - as a key driver of industrial upgrading. "China's expanding consumer market is playing an increasingly important role in supporting high-tech sectors," Bian said.

China will stay committed to advancing high-quality industrial development, deepening the unified national market, strengthening domestic circulation, and solidifying the recovery of industrial profits amid external uncertainties, the NBS said.

Global Times