Chinese industrial firms experienced a significant slowdown in October as trade tensions with the U.S. escalated and domestic growth momentum weakened.

Key Highlights:

• October performance: Industrial profits dropped 5.5% year-on-year, marking the largest decline since June and reversing the double-digit growth seen in August and September.
• January–October performance: Profits for the first ten months of 2025 rose 1.9%, down from a 3.2% increase in January–September.

Sector Performance:

• Mining: Profits plunged 27.8% in the January–October period.
• Manufacturing & Utilities: Grew 7.7% and 9.5%, respectively.
• Automakers: Profits rose 4.4% for the first ten months, slightly improving from 3.4% in the first nine months.

Ownership Breakdown:

• State-owned enterprises: Flat growth.
• Foreign-invested firms: Gained 3.5%.
• Private companies: Up 1.9%.

Reasons for Decline:

• Trade tensions: Escalating U.S.-China trade disputes in October, with the U.S. threatening 100% tariffs on certain Chinese imports.
• Domestic demand: Weak consumer spending and slower corporate activity.
• High-base effect: Strong performance in the previous year inflated comparison figures.

Manufacturing Activity:

• Official manufacturing PMI fell to 49.0 in October, a six-month low, signaling contraction (readings below 50 indicate decline).

Trade and Diplomatic Risks:

• Despite a temporary relief from a trade pact reducing U.S. tariffs, uncertainties remain due to weak global demand.
• China has announced a ban on all Japanese seafood imports amid rising diplomatic tensions over Taiwan, further complicating trade prospects.

Summary:
October marked a clear slowdown for Chinese industrial firms, reflecting the combined effects of trade tensions, weaker domestic consumption, and sector-specific challenges. While some areas like utilities and manufacturing showed moderate growth, high exposure to global trade risks and slowing momentum suggest cautious near-term outlook for China’s industrial sector.