Page 177 - CW E-Magazine (8-7-2025)

Special Report

Fig. 2: Profi ts, revenues and inventories for industrial enterprises
Source: China National Bureau of Statistics
turers to diversify production outside of and durable goods. Stabilization in the shipments increasing 38.3%. Growth in
China, accelerating the adoption of the housing market, along with improved this sector is supported by government
“China+1” approach. This trend bene- stock market performance, has bolstered initiatives promoting infrastructure
fi ts alternative manufacturing hubs, consumer confi dence. development and equipment upgrades,
notably Southeast Asia and India, including subsidies for replacing out-
where MIO growth is projected at 4.0%, Industrial enterprises’ profi tability dated machinery.
surpassing China’s revised forecast. After six consecutive months of
decline, profi ts for industrial enterprises Outlook
Consequently, we have adjusted started to recover from March 2025. Overall, China’s manufacturing
China’s MIO growth forecast down- While tariffs are prompting some pres- sector is on a path of gradual recovery,
ward from 3.2% to 2.9% in the latest sure on Chinese suppliers to lower prices despite the headwinds from tariffs.
May projection, compared with our for US buyers, profi t margins had Growth in China’s MIO is expected to
February forecast. already been compressed due to price rise from a low base of 2.0% in 2024 to
competition throughout 2023 and 2024. 2.9% in 2025 and 3.5% in 2026, with
Domestic demand and recovery in This suggests limited scope for further a CAGR of 3.4% projected through to
some Chinese industry sectors signifi cant margin reductions. 2029. The stabilization of the housing
Despite export-related challenges, market and sustained domestic demand
China’s domestic economy demon- Profi tability started to improve for will be critical drivers of this recovery.
strates signs of resilience and gradual China’s industrial enterprises from
recovery, as refl ected in multiple indi- March 2025. However, China’s manufacturing
cators. growth is likely to remain moderate in
Construction sector indicators the medium term. As a mature economy
Consumer spending The contraction in housing sales facing structural adjustments and the
Retail sales of consumer goods in- has eased compared with the previous increasing relocation of manufacturing
creased by 5.1% year-on-year in April two years. Additionally, the excavator capacity under the “China+1” trend,
2025. Since late 2024, consumer spend- market (a key barometer for China’s China is not expected to match the rapid
ing has been supported by government- construction activity) showed notable growth trajectories anticipated for India
issued consumer coupons, with parti- growth, with shipments rising 23.8% and several Southeast Asian economies
cular strong performance in electronics year-on-year in Q1 2025 and domestic over the next fi ve years.

Chemical Weekly July 8, 2025 177

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