Chinese companies lag global peers on profit margins as demand stays weak

Listed Chinese companies recorded a profit margin of 4.88% in the first half of 2026, compared with 8.87% among their international peers, according to a Reuters analysis of LSEG data published on Friday. Weak consumer demand at home and a stronger yuan squeezed profitability even as exports helped lift economic growth.

Higher costs squeeze manufacturers
The analysis covered 5,209 listed Chinese companies and 9,733 companies elsewhere, each valued at $100 million or more. Chinese software, IT services and property development companies recorded negative margins at sector level. Carmakers posted a margin of 2.5%, while technology hardware, storage and peripherals companies recorded 3.5%.

Official data showed that prices charged by industrial producers rose 5.0% in September from a year earlier, while the prices they paid for inputs climbed 6.9%. Factory-gate prices for consumer goods fell 0.1% over the same period. The figures illustrate the pressure on manufacturers whose costs are rising while weak demand limits their ability to charge more. China’s economy grew 4.5% year on year in the third quarter, but retail sales grew only slightly and the property market remained in a downturn.

A stronger yuan adds pressure on exporters
The yuan has gained about 10.2% against the US dollar since April 2025. For exporters that sell in dollars and pay most of their costs in yuan, a stronger currency can reduce the value of overseas sales when those earnings are converted back into yuan.

Earlier this week, the People’s Bank of China said it would raise the share of foreign-currency deposits that financial institutions must hold in reserve from 4% to 6% on 15 November. The move will reduce the amount of foreign currency available in the banking system. Analysts said it could slow the yuan’s appreciation, although exporters’ margins will also depend on input costs and what customers are willing to pay.

Newshub Editorial in Asia – 6 November 2026