China's industrial sector experienced deepening challenges, as corporate profits contracted at an accelerated pace amid persistent concerns over weak domestic demand and deflationary pressures affecting the broader economic recovery.

Profit Decline Accelerates

The National Bureau of Statistics reported that industrial profits fell 13.1% year-on-year, representing a significant acceleration from the 5.5% decline recorded in the previous period. This marked the second consecutive period of contraction, with the latest drop highlighting the ongoing pressures faced by Chinese businesses.

Factors Contributing to the Decline

The sharp decline in industrial profits can be attributed to several factors:

1. Weak domestic demand
2. Deflationary pressures
3. Challenges in economic recovery

These elements have combined to weigh heavily on corporate earnings, creating a challenging environment for Chinese industrial firms.

Implications for the Economy

The accelerating decline in industrial profits raises concerns about the overall health of China's economy. As a key driver of economic growth, the industrial sector's performance is closely watched by policymakers and analysts alike. The continued contraction may prompt discussions about potential policy responses to support the sector and stimulate domestic demand.

Looking Ahead

As China navigates these economic headwinds, the focus will likely remain on measures to boost domestic consumption and address deflationary pressures. The government and central bank may consider additional stimulus measures or policy adjustments to support industrial profitability and overall economic growth.

China's legislature has approved comprehensive revisions to the country's Foreign Trade Law, incorporating provisions to safeguard national sovereignty, security and development interests. The revised legislation, passed by China's top legislative body, will take effect on March 1, 2026, according to state news agency Xinhua.

Key Provisions and Timeline

The Foreign Trade Law revision represents the second major overhaul since its enactment in 1994, marking a significant evolution in China's trade-related legal framework. The law was previously revised three times since China joined the World Trade Organization in 2001, with the most recent revision in 2022.

Enhanced Trade Defense and Protection Mechanisms

The revision significantly expands China's legal toolkit for protecting national interests while countering external challenges. The updated law strengthens intellectual property rights protections and establishes a trade adjustment assistance system designed to stabilize supply chains amid global uncertainties.

Key areas of focus include provisions to safeguard national sovereignty, security, and development interests. The law empowers policymakers to retaliate against trading partners that seek to curb Chinese exports and introduces mechanisms such as "negative lists" to open restricted sectors to foreign firms.

Strategic Objectives for High-Quality Trade Development

China is overhauling the law to enhance competitiveness and drive the development of high-quality foreign trade amid escalating global tensions and evolving international norms. The revision aims to address China's efforts to reduce reliance on external pressures while positioning the country for stronger international trade engagement.

The updated legislation focuses on several strategic priorities that represent key areas for China's economic development, including digital trade frameworks, green trade initiatives, and enhanced legal mechanisms for trade dispute resolution. A new provision stipulates that foreign trade should "serve national economic and social development" and help build China into a "strong trading nation."

International Trade Relations Impact

This approach differs from the 2020 revision, which concentrated on trade defense tools following tariff disputes with the first Trump administration. The current changes reflect a more comprehensive strategy for international trade engagement, incorporating both defensive and developmental elements.

Beijing is also refining the language of its regulatory powers in anticipation of potential legal challenges from private firms, which are becoming increasingly prominent in China's economy. The revised law provides clearer legal foundations for government actions while maintaining regulatory authority over private exporters and establishing frameworks for trade adjustment assistance.