Technology Lifts China’s Industry Amid Weak Demand

At the same time, Reuters draws attention to a slowdown in profit growth at Chinese enterprises. The agency links this trend to rising costs and continued weakness in domestic demand, while also noting strong results in industries related to electronics and artificial intelligence.

In this context, let us examine the dynamics of profitability indicators for Chinese enterprises over the past two years. According to the National Bureau of Statistics of China, current figures noticeably exceed last year’s results. At the end of 2025, profits of China’s large industrial enterprises increased by only 0.6%, and profits in manufacturing by 5%. In January–July 2026, manufacturing profits rose by 18.8%, and mining profits by 34.9%.

Particularly notable is the production of computers, communications and other electronic equipment, where profits more than doubled. At the same time, profits in the automotive industry fell by 20.4%, in the production of non-metallic mineral products by 48.2%, and in ferrous metallurgy by 51.2% (Source: National Bureau of Statistics of China). This pattern of profit dynamics shows that improvements in the financial results of industry are distributed extremely unevenly across sectors, which can be explained by uneven cost growth in different branches of the Chinese economy and weak demand—both consumer and investment demand.

Thus, investment in manufacturing decreased by 1.7%. At the same time, faster growth in high-tech industries can be linked to increased investment in digital infrastructure and artificial intelligence (AI): 1) investment in information services grew by 19.2%, 2) it is likely that the rapid growth of digital infrastructure and AI created demand for non-ferrous and rare-earth metals, which explains the 34.9% increase in profits in the mining sector.

Representatives of the Chinese authorities also speak about the heterogeneity of sectoral development and the difficulties of recovering the national economy as a whole. On August 17, 2026, Premier of the State Council of the PRC Li Qiang called insufficient domestic demand one of the most noticeable current problems of the economy and noted growing difficulties for some enterprises. On August 21, 2026, China’s Vice Minister of Finance Liao Min reported that additional measures were being prepared to expand domestic demand and support consumption in the second half of the year. In a February review of China’s economy, the International Monetary Fund forecast a slowdown in GDP growth from 5% in 2025 to 4.5% in 2026 and noted weak private domestic demand, the continuing correction in the real estate sector, and an increased dependence of growth on exports. (Source: State Council of the PRC, 17.08.2026; Ministry of Finance of the PRC, 21.08.2026; IMF, 18.02.2026).

Growth in China’s industrial profits cannot yet be considered a sign of uniform economic growth. The strongest momentum is concentrated in high-tech and certain commodity sectors, while some industries oriented toward domestic demand remain under pressure. In the near term, the sustainability of this growth will depend on a recovery in consumption and private investment. If domestic demand remains weak, technology sectors will continue to support overall industrial indicators; however, the imbalance between sectors will persist.

Thus, high technology supports the growth of China’s industry amid weak demand and makes a noticeable contribution to the dynamics of the national economy.

Author: Doctor of Economics, Professor of the Department of World Economy and World Finance, Financial University under the Government of the Russian Federation Rinas Vasimovich Kashbraziev.