China Profit Growth Resilient Amid Tariff Truce

China's industrial profits rose 1.4% year-on-year in the first four months of 2025, up from 0.8% previously, reflecting the positive impact of policy support measures like subsidies and trade-in programs. In April, profits increased by 3% compared to the previous year, even as manufacturing activity fell to a 16-month low and exports to the U.S. dropped more than 21%. Despite these headwinds, overall exports rose 8.1% due to strong demand from Southeast Asia. A recent truce between the U.S. and China resulted in reduced tariffs, but domestic consumption and retail sales remained sluggish, indicating a supply-demand imbalance. Economic challenges persist, and investors are anticipating further fiscal support from the government to boost private spending. These factors highlight both the resilience and continued vulnerabilities within China's industrial sector.