China’s Industrial Profits Bouncing Back After 3-Year Downtrend

By Lynn Song of ING Think

Economic and Financial Analysis • May 26, 2026 at 11:30 PM EDT

China’s industrial profits surged to a 52-month high in April, signaling an end to a three-year downtrend.

China’s industrial profits rose to a 52-month high in April, boosting year-to-date profits to the highest level since March 2022. For now, the recovery is sector-driven rather than broad-based. But it’s an encouraging sign after three years of largely negative industrial profit growth

Industrial profits see an uneven recovery year-to-date

China’s April industrial profits grew a solid 24.7% year-on-year, bringing the year-to-date profits growth to 18.2% YoY. In aggregate, profits have been on a solid recovery trajectory in 2026, with revenue outpacing cost increases. The computers, communications, and electronic equipment segment saw strong profit growth of 107.7% YoY ytd amid the global tech price increases. Non-ferrous metals mining and beneficiation (94.9%) and non-ferrous metals smelting and processing industries (117.8%) also performed strongly.

However, this strength is not uniform. Electrical machinery and equipment manufacturing (-11.4%), auto manufacturing (-16.8%), and metal products (-13.8%) saw profits fall year-to-date as costs rise faster than revenues. Many other sectors continued to see profits contract.

The data makes one thing clear: despite the strong headline figure, the recovery is still narrow and sector‑driven, not broad‑based. This suggests that anti-involution efforts are not necessarily the main driver for this recovery. Yet after three straight years of negative profit growth, the strength of the data so far this year is welcome news.

Thus far, we haven’t seen a major acceleration in input costs at the aggregate level in the industrial profits data. Overall operating expenses stayed unchanged from the first quarter at 4.5% YoY ytd. However, we can see that expenses began to rise more noticeably in the utilities sector, which rose from -0.2% YoY in 1Q26 to 0.6% YoY ytd by April. If energy prices remain consistently elevated, costs could rise more broadly and start to impact profit growth. The data so far suggests we are on track to see the first year of positive industrial profit growth since 2022.

China's industrial profits growth may be breaking out of a 3-year downtrend

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