Fast-growing new growth drivers, including AI-related industries, are fueling sustained growth in China’s industrial profits, as the country’s shift toward innovation-driven development gathers momentum.
China’s industrial corporate profits maintained strong momentum in the 1H26, rising +18.7%yoy to CNY3.95t and easing only marginally from the +18.8%yoy in Jan–May 2026. Robust external demand and resilient export volumes continued to cushion the ongoing drag from sluggish domestic consumption, underscoring an increasingly dual-track and uneven economic recovery.
Growth was broadly broad-based across ownership structures, led by joint-stock companies (+24.7%yoy) and state-owned enterprises (+17.9%yoy), while private sector profit growth trailed at a more modest pace (+13.0%yoy).
On a sectoral level, the expansion was anchored by upstream mining (+33.5%yoy) and advanced manufacturing (+20.1%yoy), offsetting a -4.2%yoy contraction in the utilities segment. High-tech manufacturing and raw material processing delivered exceptional gains, notably in the non-ferrous metal smelting (+99.4%yoy), computer, communication, and electronic equipment manufacturing (+96.9%yoy), and chemicals (+67.8%yoy). However, single-month data points to emerging top-line deceleration: industrial profit growth moderated to +15.1%yoy in Jun-26, slowing noticeably from May’s +21.1%yoy surge as base effects normalised and domestic margin pressures re-emerged.
China’s 1H26 industrial profits reflect a two-speed expansion: robust external demand for tech hardware (+96.9%) and primary metals (+99.4%) cushioned the economy, but weak domestic consumption and real estate drag continues to weigh on private enterprise growth (+13.0%). High input costs and soft domestic demand are squeezing downstream margins, causing profit growth to decelerate sharply in Jun-26. MBSB noted that without swift demand-side policy stimulus from the government to bolster consumer spending, industrial capex and output risk slowing through 2HCY26.
