In July, China's industrial profits growth decelerated to 11.2%, the weakest pace this year, as demand softened and the economy slowed. For the first seven months of 2023, profits rose 17.6%, down from 18.7% in the first half. This slowdown is attributed to declining investments in property and infrastructure, particularly affecting the steel and cement industries.
However, the integrated circuit sector, driven by the AI boom, saw profits increase by 18.5%, contributing significantly to the electronics sector's overall gains. Raw materials manufacturers also experienced a robust profit increase of 55.2%. Despite these gains, consumer-facing industries struggled, with furniture manufacturing profits plummeting by 58.2%.
The broader economic context shows a weakening growth rate, with July's factory-gate inflation slowing to 3.5% and real export growth declining. Economists anticipate that Chinese authorities may implement targeted support measures to stabilize corporate profitability, although a strong recovery is unlikely due to ongoing challenges in the property market and subdued consumer confidence