China’s industrial profit growth slows again in June as oil falls
LIUZHOU, CHINA – JULY 25: Robotic arms are deployed at Guangxi Liuzhou Zhuotong Auto Parts Co., Ltd. in Liuzhou, Guangxi Zhuang Autonomous Region, China, on July 25, 2026. He assembles automobile parts in his workshop.
O Huawen | Visual China Group | Getty Images
China’s industrial profit rose 15.1% in June from a year earlier, according to data released by the National Bureau of Statistics on Monday; It slowed down for the second consecutive month as the easing in energy prices reduced the impact of the price increases that led to this year’s recovery.
The June figure continued a two-month slowdown after a 21.1% increase in May marked the first slowdown since November.
Profits increased by 18.7% in the first half of this year. 18.8% speed recorded January-May period.
Industrial corporate earnings have made a remarkable comeback this year; It has moved from barely positive growth to double-digit gains in 2025; because an AI-powered boom in chip and equipment manufacturing has coincided with the end of nearly three years of factory-gate deflation.
A favorable comparison with last year also helped profit recovery. Earning It fell by 3.6 percent in June It decreased by 2.8% last year and in the first half of 2025.
Ex-factory prices also increased by 3.6% annually in the second quarter. first positive reading Since late 2022.
Economists say this reflation surge looks shaky, given that much of the recovery in prices is due to rising global energy costs while domestic demand is declining.
According to LSEG data, producer prices fell 0.3% month-on-month in June, the first decline since July 2025, as the normalization of tanker flows through the Strait of Hormuz lowered oil, refined fuel and petrochemical prices.
Investors will now turn to the Communist Party’s Politburo meeting, traditionally held in late July, where top leaders will review first-half performance and set policy direction for the rest of the year.
Economists expect stronger easing language following the slowdown in the second quarter, but expectations for a major stimulus package remain low; Beijing is avoiding stronger action because exports remain resilient and it focuses on cutting excess factory capacity.
“The Politburo will likely make policy support a little more urgent and prioritize faster fiscal implementation,” said Robin Xing, Morgan Stanley’s chief China economist, setting its baseline as “a gradual policy ramp-up rather than a one-off stimulus push.”
“Even if domestic demand lags, growth should remain resilient thanks to exports,” Xing said, referring to the AI-focused investment cycle in which China is a major hardware supplier and a broader Asian industrial capex supercycle now emerging.
