China’s Industrial Profits Post Fastest Growth in Over Two Years Despite Economic Pressures

China’s industrial sector delivered a surprisingly strong performance in April, with profits growing at their fastest pace in more than two years despite signs of slowing momentum across the broader economy. Official data released Wednesday showed industrial profits jumped 24.7% year-over-year in April, accelerating sharply from March’s 15.8% increase. For the first four months of the year, industrial profits rose 18.2%, improving from 15.5% growth recorded during the first quarter.

The strongest gains continued to come from China’s high-tech manufacturing industries, particularly computing and electronics equipment production. As the country’s largest industrial profit contributor, the sector saw earnings more than double compared with a year earlier, although growth moderated slightly from the pace seen in March. Analysts said continued investment in artificial intelligence infrastructure and export-oriented technology manufacturing remained key drivers behind the sector’s strong profitability.

Energy and commodity-related industries also benefited significantly from higher global prices. Profits in the oil and gas extraction industry rose 8.1% during the January-to-April period, reversing the decline seen earlier in the year, while petroleum processing profits nearly doubled as elevated crude prices boosted margins. Mining-related industries were another major contributor to the overall rebound, with profits surging fivefold compared with the same period last year.

At the same time, some traditional manufacturing sectors continued to face severe pressure. Automobile manufacturers saw profits fall 16.8% during the first four months of the year, although the pace of decline improved slightly from the first quarter. Furniture manufacturing weakened further, with profits plunging more than 54%, reflecting ongoing weakness in domestic consumption and the prolonged downturn in China’s property market.

Economists said the sharp acceleration in industrial profit growth was closely tied to rising producer prices following recent global energy disruptions. China’s producer price index climbed 2.8% in April from a year earlier, the strongest increase since mid-2022, helping improve profitability for upstream industrial producers. However, analysts cautioned that the recovery remains uneven and potentially fragile because gains are concentrated in a relatively small number of sectors.

Broader economic data released earlier this month pointed to continued weakness in parts of China’s economy. Industrial output growth slowed in April, retail sales remained subdued, and fixed-asset investment weakened further as the drag from the real estate sector intensified. Still, exports remained a major source of support for the economy, rising more than 14% year-over-year in April as overseas demand continued to hold up.

Business groups and industry observers said Beijing’s recent efforts to curb excessive competition and oversupply in sectors such as automobiles may gradually help stabilize profitability conditions. However, many analysts believe it could take several more quarters before structural improvements become more visible across the broader industrial economy.