Chinese listed companies, led by technology-heavy exchanges in Shanghai and Shenzhen, posted their fastest profit growth in four years during the first half of 2026, reflecting Beijing's strategic pivot toward tech self-reliance amidst a broader economic slowdown.
- Star Market tech profits surged over 4x year-on-year by June 2026.
- AI and domestic chip-makers lead China's new growth engine.
- State-backed buybacks exceed 200 billion yuan to support stocks.
What happened
In the first half of 2026, Chinese companies listed on the Star Market of the Shanghai Stock Exchange and the ChiNext board in Shenzhen experienced rapid profit growth, driven primarily by technology and AI-related businesses. The Star Market profits increased more than fourfold compared to the previous year, while ChiNext companies saw a 33% rise in earnings. This performance outpaced the broader market’s 19.5% profit increase.
Leading chipmakers such as ChangXin Memory Technologies (CXMT) and AI hardware companies benefited from increased capacity and investor enthusiasm following recent capital market activities, including IPOs and dual listings. Additionally, approximately 20% of listed companies announced stock buy-back plans worth over 200 billion yuan, supported in part by government-affiliated entities purchasing shares to stabilize the market.
Why it matters
This profit surge underscores Beijing's intensified focus on technological self-sufficiency, particularly in artificial intelligence and semiconductor production, marking a strategic departure from China's previous reliance on credit-driven growth. Analysts view technology and high-end manufacturing as the new pillars of economic expansion, which helps China compete in the global AI race, especially against the US.
However, the rapid profit growth in technology sectors contrasts with weaker economic data from other parts of China’s economy, highlighting a growing economic divide. This bifurcation suggests a K-shaped recovery where advanced tech firms pull ahead, while traditional industries struggle, posing challenges for inclusive growth and economic stability.
What to watch next
Investors and policymakers will closely monitor whether Beijing continues channeling resources and support towards the tech sector to sustain growth momentum rather than adopting broad stimulus measures. The ongoing adoption of home-grown AI chips and capacity expansions in memory and hardware sectors are key indicators of the tech industry's trajectory.
Market performance metrics, such as the Star Market 50 index, which outperformed broader indices despite mid-year volatility, will be watched as a gauge of confidence in China’s tech-driven recovery. The development and profitability of firms like Cambricon Technologies and Zhongji Innolight will also signal China’s competitive stance in critical tech fields moving forward.