Chinese Industrial Profits Grow 15.5% as Manufacturing PMI Returns to Expansion
Key Facts
Profits at major Chinese industrial companies rose 15.5% year on year in the first nine months of 2026, while September profits alone increased 14.4%, according to data published by the National Bureau of Statistics on October 28. The figures put industrial company performance among the leading activity indicators available at month-end, with profits improving month on month. In September, industrial value added rose 5.5% year on year, up 0.3 percentage points from the previous month, while manufacturing output grew 6.0%. The manufacturing purchasing managers' index came in at 50.1%, up 0.3 percentage points from August, entering expansion territory. The non-manufacturing business activity index also reached 50.2%, with construction at 50.3% and services at 50.2%.
The improvement in industrial indicators coincided with a 2.5% year-on-year rise in utilized foreign investment in China in September, according to the Ministry of Commerce. The monthly reading came as utilized investment remained lower on a cumulative basis from January to September, ministry data showed. The divergence between September and the broader period presents a mixed picture of investment flows: growth in the latest month versus a decline in the cumulative total. By source, actual investment from Canada rose 90.5% in the first nine months, from France 31.8%, and from Switzerland 26%. Investment from the United States also increased 7.7% and from South Korea 6.8% over the same period. These rates highlight differences in investment flows by source country alongside September's rise in investment.
In the stock market, the People's Bank of China said social security, pension and insurance funds, along with other medium- and long-term funds, had made net purchases of more than 600 billion yuan of A-shares since the start of 2026 through its September statement. It added that the market value of these funds' holdings of listed A-shares had increased 12.5% from the end of 2025. The figures come amid a stated regulatory push to support market stability: the China Securities Regulatory Commission's 2026 work conference listed stabilizing the market and strengthening its positive momentum among its five priorities. The commission's chairman said in March that the regulator would continue to improve market-stabilization mechanisms and expand countercyclical adjustment tools. This provides official context for institutional purchases, without the statement linking those purchases to specific funds.
Technical market indicators point to sharp pressure on Chinese AI and chip stocks. A Reuters analysis on October 26 said the STAR50 index, which includes AI and semiconductor companies, had fallen about 40% in less than four months, with its market value down about 480 billion dollars. Reuters reported in July that state-owned companies had spent 9 billion dollars to halt a technology-led selloff, noting that high valuations and weak earnings had made supporting AI shares a challenge for state funds tasked with improving returns. This backdrop puts market-stabilization efforts under pressure from declines in technology stocks, while September readings showed improvement in industrial and non-manufacturing activity indicators. At the same time, utilized investment in September moved higher year on year, according to the ministry.