China's Internet Sector Revenue Reaches ¥874.9B in Jan–May, Up 10.4% YoY
Taylor Wilson
MIIT data shows China's major internet firms posted ¥874.9 billion in revenue for Jan–May, up 10.4% year-on-year — but profit growth is already slowing. Whether earnings can catch up with revenue in H2 is the key test.
Revenue is accelerating — what does "steady progress" actually mean?
Jan–May internet business revenue reached ¥874.9 billion, up 10.4% YoY — 0.5 percentage points faster than the Jan–Apr pace.
This means → the sector is still expanding, and the pace ticked up rather than down.
In plain terms = internet companies are earning more, and the rate of increase itself got a little faster.
Revenue sped up, so why did profit slow down?
Total profit hit ¥79.9 billion, up 9.7% YoY, but the growth rate fell from the Jan–Apr reading.
Revenue growth accelerating while profit growth decelerates creates a widening gap — a "scissors spread."
This means → companies are spending more, but that spending has not yet converted into matching profit.
R&D expenditure reached ¥48.18 billion, up 15.3% — 6.8 percentage points faster than Jan–Apr. That is the fastest of the three metrics, and it tells us where much of the money went: research and development.
Where is the money concentrated?
The eastern region accounts for 90.7% of national internet revenue, up 11.1% YoY — nearly the entire industry rests on one region.
Beijing–Tianjin–Hebei holds 33.1% of national revenue, up 14.7%; the Yangtze Delta holds 31.7%, up 6.8%. Together they account for roughly 65%.
Central China fell 17.4% YoY; the northeast fell 26.3%. The regional divide is stark.
In plain terms = internet revenue is overwhelmingly concentrated in Beijing, Guangdong, Shanghai, and Zhejiang. The central and northeastern regions are not just lagging — they are shrinking.
What matters in the second half?
Whether the "scissors spread" — revenue accelerating, profit decelerating — closes is the key gauge of sector health.
R&D spending growth far outpaces both revenue and profit. This reflects companies actively front-loading investment — but converting that investment into profit takes time.
This means → if profit growth fails to catch revenue growth in H2, cost pressure is building; if it catches up, the earlier bets are starting to pay off.
Content is for reference only, not financial advice.