In the first half of 2026, China's internet and software sectors posted steady revenue growth but diverging profit trends. Internet business revenue reached 1,067.5 billion RMB, up 10.1% year-on-year, while profit surged 16.6% to 98.99 billion RMB. Software revenue rose 9.5% to 7,718.2 billion RMB, but profit growth slowed to 1.0% at 899.9 billion RMB. Software exports grew 11.4% to 33.79 billion USD. R&D spending in the internet sector increased 14.1% to 59.55 billion RMB.
A former Xiaohongshu employee, Chen Hao, reported a contradiction in the company's VIE structure disclosure after a court ruled that overseas stock options granted by a related entity constituted labor compensation. The Guangzhou court ordered Xiaohongshu to pay about 850,000 RMB in damages, including compensation for wrongful termination and option losses. Chen Hao subsequently filed complaints with the Hong Kong Stock Exchange and the CSRC, alleging that Xiaohongshu claimed no control over the overseas option issuer in labor litigation but must prove 100% control for its Hong Kong IPO. The case is seen as a landmark ruling on VIE structure and option compensation.