China industrial profits rise 18.7% in first half of 2026
An AI-led boom in chip and equipment manufacturing and the end of factory-gate deflation supported earnings, but June profit growth slowed to 15.1% as weak demand and cash flow strains persisted.
China’s industrial profits rose 18.7% from a year earlier in the first half of 2026, easing slightly from the 18.8% pace in January-May as June profit growth slowed to 15.1% from 21.1% in May and 24.7% in April, the weakest monthly gain of the year. Industrial earnings have rebounded this year, helped by an artificial intelligence-driven boom in chip and equipment manufacturing, the end of nearly three years of factory-gate deflation, and a favorable comparison with last year’s weaker base. The latest data also highlighted persistent strains in the broader economy: National Bureau of Statistics statistician Yu Weining cited weak demand and cash flow pressures, while auto manufacturing profits fell 19.5% in the first half. Exports and high-tech manufacturing, including electronics and AI-related fields, remained more resilient than domestic consumption and property-linked activity. China’s second-quarter GDP grew 4.3%, the slowest pace since late 2022, underscoring pressure on policymakers as investors look to upcoming Politburo meetings for signals on second-half support.
- factory-gate deflation: A period when prices charged by producers for goods leaving factories are falling
- producer prices: Prices received by manufacturers and other producers for their goods, often used to gauge pipeline inflation
- Politburo meeting: A senior Communist Party policy-setting gathering closely watched for signals on China’s economic direction