China’s Industrial Profits Show Resilience Despite Economic Headwinds
AI-driven technology firms fuel earnings growth, while weak domestic demand and property sector challenges continue to pressure the broader economy.
BEIJING, June 27: China’s industrial sector maintained robust profit growth in May, although the pace moderated from the previous month, underscoring the country’s uneven economic recovery amid persistent weakness in domestic demand and an ongoing property market slowdown.
According to data released by the National Bureau of Statistics (NBS) on Saturday, profits earned by major industrial enterprises increased 21.1 percent year-on-year in May. While the figure remained in double digits, it marked a slowdown from the 24.7 percent growth recorded in April.
For the first five months of the year, industrial profits expanded by 18.8 percent compared with the same period in 2025, slightly higher than the 18.2 percent growth reported for the January-April period, indicating that manufacturing continues to provide important support to the economy.
China’s economic recovery has largely depended on industrial production and export-oriented manufacturing, as household spending and private investment remain subdued. Economists say prolonged difficulties in the real estate sector and structural challenges continue to weigh on consumer confidence and overall domestic economic activity.
Adding to the uncertainty, Chinese exporters are also facing growing external risks as geopolitical tensions in the Middle East, particularly the prolonged Iran conflict, create fresh concerns over global trade and supply chains.
The latest data revealed significant differences across industries. Manufacturers of computers, communication equipment and electronic products posted exceptional profit growth of 103.9 percent during the January-May period, supported by surging global investment in artificial intelligence technologies and advanced digital infrastructure.
In contrast, the automobile industry experienced a sharp decline in profitability. Despite healthy overseas shipments, profits in the automotive sector fell 19.8 percent during the first five months of the year, reflecting intense domestic price competition, rising production costs and excess manufacturing capacity.
Market analysts believe Chinese policymakers are likely to introduce additional targeted measures aimed at supporting business profitability, particularly in industries facing prolonged overcapacity and fierce market competition. Further policy assistance could include financial incentives, industrial restructuring and measures to stimulate domestic consumption.
The industrial profit statistics cover enterprises generating annual revenue of at least 20 million yuan (approximately $2.95 million) from their principal business operations, providing an important indicator of the health of China’s manufacturing sector and broader economic performance.
