China's industrial profits growth slowed to its weakest pace this year in July, expanding 11.2% from a year earlier, as soft demand and a broader economic slowdown weighed on manufacturers.
For the first seven months of the year, profits climbed 17.6% from a year earlier, according to National Bureau of Statistics data released Thursday, losing momentum after 18.7% growth in the first half of the year.
Industrial corporate profitability has still seen a notable turnaround, swinging from barely positive growth last year to double-digit gains this year, largely helped by a global artificial intelligence boom that fueled demand for computing and electronics equipment manufacturing.
Sector performance
- The integrated circuit industry, led by computing and storage chip manufacturers, saw profits expand 18.5% in the January-July period from a year earlier, contributing over 80% of the profit gains across the electronics sector.
- Optical fiber manufacturing profits rose more than fivefold, boosting overall gains in advanced manufacturing.
- Raw materials manufacturers saw profits expand 55.2% as of end-July from a year earlier.
- The petroleum processing industry turned a profit over the seven months as supply disruptions in the Middle East pushed up prices for lower-stream chemical products.
- Furniture manufacturing's profit decline steepened to 58.2% for the first seven months, worse than the 52.7% recorded as of June.
"Decelerating growth was primarily dragged down by falling investment in property and infrastructure, evidenced by worsening profits in steel and cement industries," said Tianchen Xu, senior economist at Economist Intelligence Unit, adding that raw materials and the AI supply chain remained resilient while consumer-facing industries struggled.
