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China's industrial profit growth slowed sharply in August as weak domestic demand and excess capacity weighed on firms, with gains in technology manufacturing linked to the artificial intelligence (AI) boom unable to offset broader economic imbalances, as per a news report by Reuters.
Profits at China's industrial firms rose 4.2 per cent year-on-year in August, slowing from an 11.2 per cent increase in July, according to data from the National Bureau of Statistics cited by Reuters. In the first eight months of the year, industrial profits increased 15.7 per cent, easing from 17.6 per cent growth in the January-July period. The slowdown comes as companies struggle to maintain pricing power amid soft consumption and excess capacity in some sectors. Reuters reported that manufacturers are increasingly relying on overseas markets to secure better profits, a shift that could deepen China's dependence on exports at a time of heightened geopolitical tensions and greater scrutiny of its trade surplus. Technology manufacturing remained a key source of profit growth. Profits in computer, communication and other electronic equipment manufacturing jumped 110 per cent in the first eight months, according to a breakdown of the NBS data cited in the report. However, profits in the wine, beverages and refined tea manufacturing industry fell 34.7 per cent during the period, highlighting the pressure facing sectors more exposed to weak domestic consumption. The report also pointed to concerns that the rapid expansion of AI-related industries could add to existing economic imbalances. Earlier this month, a central bank adviser warned that AI could worsen and extend the gap between strong supply and subdued demand, according to Reuters. The warning adds to calls for measures to strengthen consumer spending and improve balance sheets across the economy. China's industrial profit data covers firms with annual revenue of at least 20 million yuan (USD 2.98 million) from their main operations. (ANI)
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