China's industrial firms posted profit growth of 11.2% year-on-year in July 2026, the weakest pace since December 2025, data showed this week [1, 2, 3]. Profits for January to July rose 17.6% from a year earlier, a slowdown from 18.7% growth in the first half of the year [1, 2, 3]. The results covered companies with annual revenues of at least 20 million yuan (about US$2.9 million) from their main operations [1, 2].
The slowdown reflects softening domestic demand, higher input costs, and a continuing slump in the property market [1, 3]. Yu Weining, a statistician at China's National Bureau of Statistics, said, "The global environment remains complex and challenging, while the imbalance between strong supply and weak domestic demand remains a key constraint" [1].
Manufacturing sectors tied to exports and high tech fared better, benefiting from the global AI boom. Profits in computer, communication and electronic equipment manufacturing more than doubled with 110% growth year-to-date from January to July 2026 [1]. Fiber optics profits surged 468.4%, optical cable manufacturing rose 62.6%, and communication system equipment profits climbed 55.0% during the same period [1]. The integrated circuit industry grew 18.5%, making up over 80% of profit gains in the electronics sectors [3].
Producers of raw materials also saw gains. Their profits increased 55.2% for the first seven months of the year, led by petroleum-processing companies returning to profitability due to supply disruptions in the Middle East [3].
On the other hand, furniture manufacturing profits plunged 58.2% in January to July, worsening from a 52.7% decline recorded in the first half of 2026 [3]. Steel and cement producers suffered from reduced property and infrastructure investment [3].
Inflation at the factory gate eased to a three-month low of 3.5% in July, largely reflecting fading effects of earlier global energy price rises [2, 3]. China's economic growth slowed sharply in the second quarter, marking its weakest pace in over three years [2, 3]. Consumers remain cautious amid an uncertain global outlook, with sluggish household confidence and muted private investment dampening recovery efforts [1, 2]. Julius Baer economist Sophie Altermatt said fiscal measures may provide "some near-term stabilisation and put a floor under growth," but a "strong cyclical rebound" is unlikely while property and investment remain weak [2].
In late August, China’s vice finance minister pledged to provide additional timely fiscal support to shore up growth as momentum wanes in the third quarter [1]. Kweichow Moutai, a key domestic company, reported a 2% drop in first-half net profit due to weak domestic demand and the property market slump [1].
