Mercado Noticias

Key Points

• China’s industrial profits grew at their weakest pace this year, expanding just 4.2% in August from a year earlier.
• The muted growth in August marked the weakest growth since November 2025, when profits posted a double-digit decline.
• The automobile manufacturing industry saw profits drop by 16% year on year, as the sector faces cut-throat competition.
• The earnings report also points to an increasingly bifurcated economy, with strong earnings growth in high-tech sectors, whereas consumer-related industries showed declining profits.

SHENZHEN, CHINA - AUGUST 30: A Chinese national flag flies from a vessel in front of the MSC Claire container ship berthed beneath gantry cranes at Yantian Port on August 30, 2026, in Shenzhen, Guangdong Province, China. China is set to release its latest official manufacturing purchasing managers’ index as investors assess the outlook for factory activity, domestic demand and exports amid persistent pressure on the world’s second-largest economy. (Photo by Cheng Xin/Getty Images)
Cheng Xin | Getty Images News | Getty Images

China’s industrial profits grew at their weakest pace this year, expanding just 4.2% in August from a year earlier, official data released Monday showed, as manufacturers grapple with persistent weakness in consumer demand and a sustained rise in energy costs.

The muted growth in August marked the fourth straight month of deceleration, after the 24.7% expansion in April, and the weakest performance since November 2025 when profits posted a double-digit decline.

For the first eight months of this year, profits at large industrial firms climbed 15.7%, losing momentum from a 17.6% rise in the January-July period.

The slowdown comes after industrial earnings staged a notable reversal earlier this year, swinging from a barely-positive 0.6% gain for all of 2025 — the first increase after three straight years of declines — to double-digit growth. That expansion has been led by the artificial-intelligence-fueled boom in chips and computing equipment and has coincided with the end of nearly three years of factory-gate deflation.

The earnings report also points to an increasingly bifurcated economy, with strong earnings growth in high-tech sectors, such as AI and robotics, whereas consumer-related industries like clothing, autos and furniture showed declining profits.

Yu Weining, chief statistician at NBS, attributed the deceleration in August to a high base effect from last year, when profits reversed months of declines to surge 20.4% year on year, amid Beijing’s efforts to curb price wars in several industrial sectors. In the statement on Monday, Yu repeated policymakers’ pledges to bolster domestic demand and “optimize” supplies.

Profits in the computer, communication and electronic equipment manufacturing industry more than doubled for the January-to-August period, rising 110% from a year earlier. The automobile manufacturing industry saw profits drop by 16% during the same period as the sector sees cut-throat competition.

Growth in the world’s second-largest economy softened to its slowest in more than three years in the second quarter, as a multiyear property downturn continued to depress consumer demand and investment in real estate and infrastructure.

The official purchasing managers’ index indicated that manufacturing activity contracted for two consecutive months in July and August. Retail sales slowed further, and the urban investment slump deepened in August, while industrial output rebounded on the back of exports.

Economists expect Beijing to lean harder on stimulus to stabilize corporate profitability, as consolidation accelerates in sectors already facing sluggish demand, fierce competition and cutthroat price wars.

Allan von Mehren, China economist at Danske Bank, said authorities will likely step up policy implementation in the second half of this year to shore up the economy, accelerating deployment of investment in strategic sectors, such as water, power grid, data centers, networks, urban pipelines and logistics networks.