Under the spotlight of data, what is the &#34;base color&#34; of corporate profits? From 5.3% in December 2025 to 15.2%, the leap in industrial enterprise profit growth in January-February has added some surprises to the start of the year’s economy. However, it is worth delving into the fact that the early-year data is inevitably affected by short-term disturbances such as sample rotation and the timing of the Spring Festival, raising questions about the &#34;gold content&#34; of this industrial enterprise profit report—whether this high growth is a temporary fluctuation or a substantial improvement in the fundamentals of corporate profitability. Clearing the data fog, we can still capture some intriguing signals:
Sample adjustments may provide incremental support for profit growth. According to statistical regulations, the National Bureau of Statistics regularly adjusts the survey scope of industrial enterprises above a certain scale each year. Some enterprises are newly included due to meeting scale standards, while others exit due to shrinking scale. In recent years, although the growth rate of the number of large-scale enterprises has slowed, it also reflects the continuous improvement in enterprise quality. With the addition of high-quality enterprises, it may have &#34;fueled the fire&#34; for profit growth at the beginning of the year.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c30c9ade-6301-49cb-965b-fe6b47df8b0d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c30c9ade-6301-49cb-965b-fe6b47df8b0d.png"/>
Of course, the timing of the Spring Festival is also a significant technical factor contributing to the high profit growth at the beginning of the year. Considering that this year's Spring Festival is significantly later than in 2025, the disturbances to enterprise operations in January-February are smaller, and the extension of effective working time naturally leads to more profits &#34;in the bag,&#34; objectively pushing up the profit growth rate readings.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/811baf28-7497-4c75-a140-494db14121ee.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/811baf28-7497-4c75-a140-494db14121ee.png"/>
From the perspective of a three-factor framework, the high profit growth of industrial enterprises at the beginning of the year is due to the resonance of &#34;volume increase and profit margin improvement.&#34; Driven by the &#34;rush to start work&#34; in the first year of the 14th Five-Year Plan, industrial production has significantly accelerated at the beginning of the year, with industrial added value providing strong support for profits. Although prices still drag down, the degree of PPI's drag on profits continues to narrow, which is attributed to the sustained effectiveness of &#34;anti-involution&#34; policies and the pull of input factors on the prices of certain industrial products.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5dfa0f32-1d42-4852-9d28-2fca84b28a5b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5dfa0f32-1d42-4852-9d28-2fca84b28a5b.png"/>
More importantly, the profit margin of enterprises has significantly improved. Considering the proportion of costs and expenses of industrial enterprises to revenue, this proportion has significantly decreased at the beginning of the year, possibly due to factors such as cost reduction and efficiency improvement driven by equipment upgrades and the continuation of tax cuts and fee reductions.
From the perspective of different industries, profit recovery shows significant industry differentiation: upstream relies on &#34;price,&#34; midstream relies on &#34;volume,&#34; and downstream is temporarily under pressure. In January-February, the cumulative profit growth rates for upstream, midstream, and downstream industries were 34.3%, 26.4%, and -11.4%, respectively, with upstream and midstream performing significantly better than downstream. Specifically:
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/188490a2-e5a2-46e4-b59f-7106a7d136ab.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/188490a2-e5a2-46e4-b59f-7106a7d136ab.png"/>
Upstream profit improvement is more supported by price. By comparing the marginal changes in industrial added value and PPI growth rates across different industries, we find that at the beginning of the year, the PPI of upstream industries has improved more. Driven by the &#34;anti-involution&#34; policy and input factors, from January to February, the profits of non-ferrous metal smelting and non-ferrous metal mining achieved nearly triple-digit growth.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/00251252-661e-4a10-8306-83e6260cb99c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/00251252-661e-4a10-8306-83e6260cb99c.png"/>
Midstream profit growth reflects a trend of accelerated production. In addition to the accelerated development of new productive forces, the &#34;shine&#34; of exports at the beginning of the year has also played a significant role, for example, the profit of the electronic equipment manufacturing industry increased by as much as 203.5% year-on-year, and the profit growth rates of industries such as general equipment, specialized equipment, electrical machinery, and transportation equipment all maintained positive growth.
In contrast, downstream industry profits have temporarily &#34;lagged behind&#34;. Although the &#34;prosperity&#34; of this year's Spring Festival effectively boosted the profits of the food manufacturing industry significantly into positive territory and narrowed the decline in the beverage industry, the profits of major consumer-related industries such as furniture manufacturing (-40.0%) and automobile manufacturing (-30.2%) still declined significantly, reflecting residents' cautious attitude towards durable goods and large expenditures.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/10ea91db-cb00-4197-b718-3cfbc520fbc7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/10ea91db-cb00-4197-b718-3cfbc520fbc7.png"/>
Profit improvement and proactive inventory replenishment have begun to show, but sustainability still depends on demand. Driven by the improvement in corporate profits, the growth rate of finished goods inventory accelerated from January to February, showing early signs of proactive inventory replenishment. However, whether this trend can continue ultimately depends on the recovery pace of terminal demand—current downstream profits reflect that terminal demand has not yet fully stabilized, and the sustainability of replenishment remains to be observed.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/21905a02-a9ec-4004-858e-3a2740a480a4.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/21905a02-a9ec-4004-858e-3a2740a480a4.png"/> Source: ChuanYue Global Macro
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The profit growth rate of industrial enterprises at the beginning of the year surged from 5.3% in December 2025 to 15.2%, attracting attention. Although the data is impressive, short-term factors such as sample rotation and the timing of the Spring Festival may affect the results, and caution is needed regarding the sustainability of profit growth. The sample adjustments by the National Bureau of Statistics and the impact of the late Spring Festival provide support for the profit growth rate. Overall, the acceleration of industrial production and the improvement in profit margins are the main driving factors, but there is a divergence in performance among industries, with significant profit growth in upstream and midstream sectors, while downstream faces pressure

Profit of Industrial Enterprises at the Beginning of the Year: Exceeding Expectations in Value