May profits climbed 21.1% year-on-year, down from April's 24.7%, as AI-driven manufacturing masks persistent weakness in domestic demand and the property sector.
China’s factories are still printing money. Just not quite as fast as last month.
Industrial profits grew 21.1% year-on-year in May 2026, according to the National Bureau of Statistics. That’s a meaningful step down from April’s 24.7% surge, but it still represents the kind of number most major economies would love to claim. For context, it marks one of the strongest monthly performances since November 2023.
The cumulative picture looks even steadier. Major industrial firms earned a combined 3.14 trillion CNY in profits from January through May, an 18.8% increase over the same period last year. That’s a slight acceleration from the 18.2% growth recorded through the first four months.
AI and advanced manufacturing are doing the heavy lifting #
Computer and communication equipment profits soared 103.9%. The AI investment boom that kicked off at the start of 2026 is showing up in hard manufacturing data.
Non-ferrous metal smelting and rolling wasn’t far behind, posting a 117.1% increase. Chemicals saw profits jump 71.6%.
The domestic demand problem hasn’t gone away #
The property sector remains the most visible drag. Housing market weakness continues to weigh on consumer confidence and spending.
The automotive industry offers a telling case study. Despite China being the world’s largest auto exporter, automaker profits actually fell 19.8%. Strong overseas sales weren’t enough to compensate for weakness at home.
Ownership structure also reveals divergence. State-owned enterprises saw profits rise 19.6%, while joint-stock firms grew 24.1%. Private firms lagged at 10.7%.
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