Policy patches could ease strains in Chinese industrial companies: report

A trade-in policy would modestly lift auto consumption despite weak consumer confidence.

Policy remains a key driver of sector trajectories as soft demand growth could bump against oversupply for many of China's industrial sectors in 2025, according to an S&P Global Ratings report.

For example, S&P said a trade-in policy would modestly lift auto consumption despite weak consumer confidence.

Moreover, debt relief programs for local governments could accelerate payments to engineering and construction firms. At the same time, equipment makers supplying the coal-fired power sector will see further momentum in policy support.

Further, consolidation may improve the sectors’ dynamics over the next few years. In the auto sector, concentration would improve if the state-owned carmakers merged under government directives.

"Most rated industrial firms are industry leaders that, in our view, can adapt by improving cost structures and business mixes, tapping the overseas market, and being disciplined with investments," said S&P Global Ratings credit analyst Claire Yuan.

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