Baillie Gifford China Growth Trust Interim Results

RNS Announcement

Baillie Gifford China Growth Trust plc

Legal entity identifier: 213800KOK5G3XYI7ZX18

Regulated information classification: Interim financial report.

Results for the six months to 31 July 2026

The following is the unaudited Interim Financial Report for the six months to 31 July 2026 which was approved by the Board on 22 September 2026.

The principal investment objective of the Company is to produce long-term capital growth by investing predominantly in shares of, or depositary receipts representing the shares of, Chinese companies.

Summary of unaudited results^*

Notes

^*    For a definition of terms see Glossary of terms and alternative performance measures below.

^†    The benchmark is the MSCI China All Shares Index (in sterling terms).

^#    Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer below.

^‡    Alternative performance measure see Glossary of terms and alternative performance measures below.

Past performance is not a guide to future performance.

Chair's statement

Introduction

The Board believe that the Baillie Gifford China Growth Trust (the 'Company') has a unique investment strategy with a growth style, investment in unlisted companies, prudent gearing, a competitive cost and a commitment to discount management. Many of these features contributed to strong relative investment performance in the half-year.

The six months to 31 July 2026 saw the benchmark MSCI China All Shares Index (in sterling terms) fall 5.6%. Given the short time frame, this could be seen as typical volatility in China's equity market after two years of substantial gains. Headwinds in the period included uncertainty related to the Middle East conflict, an AI sell-off, and sluggish domestic Chinese growth. It was therefore rewarding that the Company's NAV per share total return ('NAV TR') continued to outperform the benchmark index in this period, falling only 0.9%. Furthermore, the Company's outperformance has reached a significant milestone, with NAV per share total return ('NAV TR') surpassing the benchmark index's performance over the three-year period to 31 July 2026.

Key Performance Indicators ('KPIs')^*

Whilst the NAV per share total return ('NAV TR') fell marginally by 0.9%, it outperformed the benchmark index by 4.7%. The share price total return was -3.3% and also outperformed the benchmark index by 2.3%, notwithstanding the increase in discount to 9.7%, up from 7.4% at 31 January 2026. The Ongoing Charges Ratio, calculated at the end of the financial year, stood at 1.06% for the year ended 31 January 2026.

In November 2024, the Company announced a 100% performance related Conditional Tender Offer (the 'CTO'), which means that shareholders will be given the opportunity to tender as much of their holding as they wish close to NAV if performance fails to beat the benchmark in the four-year period to 30 November 2028. In the 20 months period 29 November 2024 to 31 July 2026 the NAV TR has outperformed the benchmark by 18.1%.

The very strong performance over the past three years (NAV TR of 30.8% in the three years to 31 July 2026, outperforming the benchmark by 11.5%) has therefore recouped a large part of the underperformance since the mandate change. From the mandate change to Baillie Gifford in September 2020 until 31 July 2026, the Company NAV TR and share price total return has underperformed the benchmark by 0.9% and 7.5%, respectively.

Total Return Performance^†

Whilst Baillie Gifford's investment time horizon is five to ten years, it is very encouraging that the Manager has outperformed the benchmark since August 2024, when conditions for growth investing in China have been more favourable and despite the volatility created by geopolitics.

Investment Performance

The principal contributors to outperformance were ByteDance, Zhongji Innolight, Shandong Sinocera Functional Material, CATL and Weichai Power. The main detractors were Alibaba, Tencent, Ping An, Zijin Mining and Zijin Gold. Portfolio turnover was slightly higher than usual at 37% as the managers refined the portfolio. This reflected the wide valuation dispersion across the market rather than any change to long-term thinking. The main changes to the portfolio were purchases of PetroChina and Cambricon Technologies and a reduction in Weichai Power.

The Company owns two unlisted investments - ByteDance and RedNote - which together represented 16.7% of total assets at 31 July 2026 (10.4% at 31 July 2025). Both reported positive operational progress and were revalued upwards by 27% and 37% respectively, an important contributor to overall portfolio performance. The valuation of private investments is undertaken by Baillie Gifford and supplemented by independent input from S&P Global, as detailed below. This valuation is overseen by the Board at the interim and annual results. The valuation of unlisted investments is an estimate based on a number of inputs, such as primary and secondary investments, company performance, and market data such as peer multiples.

Net gearing remained prudent and unchanged at 3.1% at 31 July 2026.

More detail about Investment Performance can be found in the Interim management report below.

Discount and Premium Management

Over the six months to 31 July 2026 the Company bought back 2.9m shares at an average discount of 10.8%, representing 5% of the Company's share capital excluding shares held in Treasury at 31 January 2026. The buyback therefore enhanced NAV total return by 0.5% in the period. Whilst this buyback rate is higher than usual, the majority occurred in March 2026 due to uncertainty created by the Middle East conflict. This demonstrates the Board's objective of utilising share price volatility to benefit continuing shareholders.

In the long run the solution to the discount of the share price relative to NAV is continuing improved investment performance. In the short run, the buyback is a key tool to address the continuing discount, together with the performance related CTO in 2028 and ongoing marketing of the Company.

Marketing

The Board co-funds marketing with Baillie Gifford, including updates from the Investment Manager, such as webinars and newsletters. If you are not already signed up but would like to do so, please scan the QR code on the back cover of the interim report.

Dividend

The Company pays only a single full-year dividend, which is declared with the annual results. Therefore, no dividend for the half-year has been declared.

Outlook

Despite tariff and energy shocks, the Chinese economy has demonstrated remarkable resilience. This is due to its manufacturing excellence and energy preparedness. Chinese companies have become world leaders in next generation computing, robotics, automation, EVs, green energy and healthcare. Furthermore, in the past year China has emerged as a global leader in AI, producing leading AI models. This has spurred cost‑effective AI diffusion into the wider economy and initiated a capex uplift in related industries to meet domestic and global demand. However, domestic challenges remain, including the ongoing recession in the property market and the lack of a broad recovery in consumer demand.

Arguably, China's K-shaped economy - where some sectors thrive and others lag - aligns with Baillie Gifford's strategy of owning a concentrated portfolio of growth stocks. The Manager sees a two-sided opportunity: depressed domestic economy expectations could support returns if stabilisation continues, while higher valuations in technology stocks will need delivery to justify their valuations. The Company has substantial exposure to key areas of China's growth such as AI, advanced manufacturing, semiconductors, internet platforms, selected consumer services and the energy transition. Over the past six months, the Manager has deliberately diversified the portfolio further, adding positions in the AI supply chain, consumer and e-commerce, selected cyclicals and energy. Throughout the Manager's focus remains on a concentrated set of high conviction growth franchises whilst staying flexible to adjust exposures as fundamentals, valuations or better opportunities emerge.

The valuation of the portfolio provides comfort in both absolute and relative terms. The portfolio trades on a prospective multiple of 12.4x and offers prospective one-year earnings growth of 17%. This is a modest premium to a slower growing benchmark and a significant discount relative to global equities. This allows for a margin of safety for uncertainty regarding AI, geopolitical concerns and deflation worries. The Board therefore continues to believe that a holding in the Company remains an attractive part of an investor's allocation to global equities in the long term.

Nicholas Pink
Chair
22 September 2026

^*    The Company has four KPIs:

     •       Net Asset Value per share total return ('NAV TR') relative to the benchmark

     •       Share price total return relative to the benchmark

     •       The discount of the share price to Net Asset Value ('the discount')

     •       The Ongoing Charges Ratio ('OCR')

^†    Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer below. All figures are stated on a total return basis. Total return and discount are alternative performance measures - see Glossary of terms and alternative performance measures below.

^#    The Company announced the introduction of a performance related tender offer (the 'Conditional Tender Offer') from 29 November 2024.

^‡    Baillie Gifford & Co Limited were appointed as Managers and Company Secretaries on 16 September 2020.

¶    The benchmark is the MSCI China All Shares Index (in sterling terms).

For a definition of terms see Glossary of terms and alternative performance measures below.

Past performance is not a guide to future performance.

Interim management report

Over the six months to 31 July 2026, the Company again outperformed its benchmark as Chinese equities gave back part of the substantial gains made over the prior two years. The Company's concentrated, growth-oriented approach resulted in total returns of -0.9% for net asset value (NAV) and -3.3% for share price, which compared with -5.6% for the MSCI China All Shares Index (in sterling terms).

Looking Back

The Chinese economy: increasingly two-speed

Over the first half of 2026, China's economy became increasingly bifurcated. GDP grew 4.7% year-on-year in the first half, but slowed to 4.3% in the second quarter. More important than the headline growth rate was what sat beneath it. Industrial production grew 5.4%, supported by continued strength in advanced manufacturing and exports, while the domestic economy weakened. Retail sales grew just 1.3%, fixed-asset investment fell 5.7%, and the property downturn remained a substantial drag.

The contrast within industry has been particularly striking. High-tech manufacturing grew 13.3% in the first half, considerably faster than the wider industrial economy, with semiconductors, electronics and other industries linked to the global AI buildout among the strongest areas. Semiconductor exports also increased sharply during the period. This is the latest manifestation of a pattern we have seen before in solar, batteries and electric vehicles: sustained industrial policy, large-scale domestic investment and intense competition are allowing Chinese companies to build globally significant positions in strategic industries.

The other half of the economy has been much weaker. Property has failed to establish a durable bottom, private investment remains subdued and the boost from earlier consumer trade-in subsidies has faded. The result is not simply a slowing economy, but one in which different sectors are diverging sharply.

For equity investors, these diverging fundamentals have increasingly translated into equally large differences in sentiment and valuation.

Policy direction from Beijing has also become clearer. This year's Two Sessions - the concurrent March meetings of the legislature and political directorate - approved both the 2026 Government Work Report and the outline of the 15th Five-Year Plan, setting the framework for economic policy through 2030.

The priorities are clear: stronger domestic demand, greater technological self-reliance, further industrial upgrading and a somewhat more supportive stance towards private enterprise and property. Technological self-sufficiency remains a central pillar, with particular emphasis on AI, semiconductors, high-end equipment, biomanufacturing and embodied intelligence, while consumption has moved higher up the policy agenda and property has been given more room to stabilise.

The measures announced alongside this policy framework were meaningful, including RMB250bn (£27.5bn) for consumer goods trade-ins, RMB1.3tn (£143bn) of ultra-long special treasury bonds and RMB4.4tn (£484bn) of local government special-purpose bonds. But this was not a return to the broad, credit-fuelled stimulus of previous cycles. The emphasis remains on trade-ins, equipment upgrades, infrastructure, local-government funding and industrial policy rather than direct transfers to households. For investors, the implication is supportive but selective: the benefits will accrue unevenly across sectors and companies.

AI and advanced manufacturing: a widening opportunity

AI remained one of the defining themes of the period, with progress continuing across models, infrastructure and increasingly physical applications. At the model layer, the competitive field has broadened well beyond DeepSeek. Companies including Zhipu and Moonshot have released increasingly capable models at materially lower costs than leading Western alternatives, while ByteDance, Alibaba and Tencent are beginning to demonstrate how AI can translate into revenues through cloud computing, advertising, content creation and existing consumer platforms. The significance is less about identifying one Chinese model winner and more that the entire ecosystem continues to improve quickly.

The period also saw a broader sell-off in global AI‑related stocks as investors questioned the scale, funding requirements and prospective returns of the infrastructure build-out. The picture in China looks somewhat different. China's major cloud providers are still investing at a fraction of the scale of their US peers: combined AI capital expenditure is roughly comparable with that of a single leading US hyperscaler. Our conversations across the supply chain suggest that the main constraint today is not willingness to invest, but access to chips, memory and datacentre capacity. As domestic capacity expands, that leaves considerable scope for investment to rise from a relatively low base.

Import substitution adds a second, more structural driver. US export controls have restricted access to leading-edge technologies, but in doing so have increased the strategic and commercial value of domestic alternatives. This is supporting investment across chip design, memory, foundries, semiconductor equipment and the wider hardware stack, creating a source of demand not solely dependent on the global AI cycle.

Portfolio holding Advanced Micro-Fabrication Equipment provides a good illustration of this process. Revenue grew by 37% in 2025 and orders remained strong during the first half of this year as Chinese semiconductor manufacturers continued to add domestic capacity. More importantly, the company is broadening from its traditional strength in advanced etching into areas including thin-film deposition and metrology, launching a further six semiconductor-equipment products in 2025. The significance is that domestic suppliers are increasingly broadening from individual process steps into a wider range of semiconductor-manufacturing equipment, reducing China's reliance on imported tools over time.

We also believe the next phase of AI will increasingly extend into the physical world. Humanoid robotics is still at an early stage, with questions remaining around use cases, reliability and where durable competitive advantage will ultimately sit.

Unitree, newly listed in the period, provides a striking example of both the progress and the uncertainty: the company delivered more than 5,500 humanoid robots in 2025, demonstrating how quickly China is beginning to move from prototypes towards early commercial production. Our research suggests Unitree has built meaningful advantages in cost, hardware-software integration and speed of iteration, although industrial reliability and manipulation capability remain less proven. More broadly, China's dense supply chains, low-cost manufacturing and experience integrating hardware and software could become increasingly valuable as AI moves from generating information towards interacting with the physical environment.

Taken together, China's AI opportunity is becoming broader rather than narrower: increasingly capable models are driving adoption, infrastructure investment still has considerable room to scale, import substitution provides a multi-year domestic tailwind, and China's manufacturing strengths may become increasingly valuable as AI moves from the digital into the physical world.

Geopolitics: strategic competition broadens

Geopolitics remained an important source of uncertainty during the period. The US-China relationship continues to be characterised by strategic competition across trade, technology and supply chains. At the same time, President Trump's summit with President Xi in Beijing in May, alongside continued high-level engagement between the two sides, provided some evidence that both governments are seeking to manage that competition and reduce the risk of unintended escalation. Our base case remains that these tensions are structural rather than temporary, but that periods of engagement can help contain the immediate risk of more disruptive outcomes.

Technology remains the most sensitive area, and the scope of restrictions is broadening. Export controls on advanced semiconductors and semiconductor-manufacturing equipment continue to constrain parts of China's technology ecosystem, while in July the US introduced restrictions on new imports of Chinese humanoid robots, alongside connected power inverters used in renewable-energy and datacentre infrastructure.

The significance is not simply the immediate commercial impact, but that strategic competition is extending beyond today's semiconductor chokepoints into emerging industries where China is building manufacturing strength.

The period also served as a reminder that geopolitical risk extends beyond the bilateral US-China relationship. The wider Middle East conflict has so far had a limited impact on the Chinese economy and has provided a useful illustration of China's energy preparedness. Substantial oil inventories, a diversified supply base spanning domestic production and multiple overseas suppliers, and the increasing electrification of its transport system have helped cushion the initial shock. China has therefore been able to navigate the disruption without a material impact on domestic activity. More broadly, the episode illustrates that China's sustained investment in electrification and energy security, while sometimes criticised as excessive, can also create considerable resilience to external shocks. The greater risk would come from a prolonged disruption to Gulf supply, which would gradually erode these buffers and increase pressure on industrial input costs and household confidence.

Our approach remains to distinguish geopolitical headlines from their underlying economic impact. We do not expect strategic competition between China and the US to disappear, but nor do we believe it implies uniform economic decoupling. The effect will vary materially by industry and company. In some cases, restrictions reduce access to markets or technology. In others they increase the strategic value of domestic alternatives. This reinforces the importance of company-level analysis rather than broad conclusions based on political risk alone.

The consumer: weak economy, stronger businesses

Domestic consumption has been one of the weakest parts of the economy. First-half retail sales grew only 1.3% year-over-year, compared with 3.7% during 2025, as the benefit from earlier trade-in subsidies faded and weakness in property continued to weigh on confidence and household wealth.

There are nevertheless important differences beneath the aggregate data. Services have generally held up better than goods, while online consumption has continued to outpace overall retail sales. Travel, hospitality and selected experience-led categories have consequently proved more resilient than areas more closely linked to property and large-ticket discretionary spending.

Portfolio holding Atour Lifestyle Holdings Limited provides a good example. Despite the weak headline consumer environment, first quarter revenues grew almost 50% year-over-year as its hotel network continued to expand while underlying performance remained resilient. Its performance illustrates how Chinese consumers remain willing to spend selectively on travel, experiences and higher-quality services even while overall confidence remains subdued. Policy is also increasingly acknowledging the need to rebalance growth towards consumption, although the emphasis remains on targeted measures rather than broad household transfers.

More fundamentally, a difficult consumer environment does not necessarily imply that the underlying quality of China's leading franchises has deteriorated to the same extent. In several areas, competitive positions, brand strength and long-term growth opportunities remain substantially better than the macroeconomic backdrop would suggest. Yet investor sentiment has moved sharply in the opposite direction. The consequence is an unusually large valuation gap between highly rated AI and advanced-manufacturing companies and parts of the domestic consumer market.

What does this mean for us as growth investors?

China today is not experiencing a broad-based cyclical recovery. Instead, growth has become more concentrated: advanced manufacturing, AI infrastructure and exports are expanding rapidly, while property and domestic consumption remain subdued. For growth investors, this makes the headline GDP number increasingly less useful than understanding where growth is occurring, how durable it is and, importantly, what expectations are already reflected in share prices.

The past six months have also demonstrated how quickly those expectations can diverge. Parts of the AI and semiconductor complex have re-rated substantially as scarcity, earnings growth and the strategic importance of domestic technology have become better understood. At the other extreme, prolonged weakness in consumption and property has led investors to place increasingly pessimistic valuations on many businesses exposed to the domestic economy. Neither conclusion should simply be extrapolated indefinitely.

This is an environment in which we think long-term active investment should be particularly valuable. The portfolio is overwhelmingly exposed to the parts of the Chinese economy where we see the strongest structural growth: AI, advanced manufacturing, semiconductors, internet platforms, selected consumer services and the energy transition. These areas are also closely aligned with many of the priorities set out in the 15th Five-Year Plan in March 2026, particularly technological self-reliance, industrial upgrading, embodied intelligence and stronger domestic demand.

We do not invest simply because an industry has policy support, we invest where that coincides with attractive end demand, strong competitive positions and the potential for durable value creation.

Perhaps most encouragingly, the opportunity set itself continues to replenish. A new generation of Chinese businesses in semiconductors, AI and robotics is reaching sufficient scale to access public markets. CXMT, China's leading domestic DRAM memory manufacturer, and Unitree, one of China's leading robotics companies, are good examples. We like the long-term prospects and competitive positions of both businesses, but did not invest after their share prices rose sharply on debut. Unitree now trades on a triple-digit 2026 earnings multiple, while CXMT trades on roughly five times the multiple of the global leader, SK Hynix. We remain interested in both companies, but will continue to be disciplined on the price we are prepared to pay.

Valuations also remain supportive. At 31 July, the MSCI China All Shares Index traded on 11.7x forward earnings, compared with roughly 19x for MSCI World. The portfolio traded on 12.4x forward earnings, only modestly above the benchmark, while still offering higher expected earnings growth over both one and three years. The portfolio's valuation premium to the benchmark has roughly halved since January, while expected three-year portfolio earnings growth has risen markedly. In our view, this represents an increasingly attractive balance between growth and valuation.

Portfolio positioning

Portfolio activity was higher than usual over the period, with six-month turnover of 37%, compared with annual turnover of around 8-20% over the previous five years. This does not reflect any change in our long-term investment horizon. Turnover can vary materially from year to year in China because valuations, competitive dynamics and investor preferences can change quickly, creating substantial shifts in prospective returns across the market. There will therefore be periods when activity rises as we respond to these changes, followed by periods of much lower turnover when the portfolio requires less adjustment.

This was one of those more active periods. Valuation dispersion across the market became unusually wide: some areas re-rated rapidly while others became materially cheaper. We used this to refine the portfolio, concentrating capital where we believed the balance of growth, quality and valuation had improved, and reducing or exiting holdings where prospective returns had become less compelling.

We continued to favour businesses exposed to structural growth in AI, advanced manufacturing and selected consumer franchises, while also broadening the portfolio's return drivers and retaining flexibility for new opportunities as they emerged.

New holdings within AI and advanced manufacturing included Cambricon Technologies, Hygon Information Technology, Suzhou Dongshan and Montage Technology. These investments sought exposure to areas where China's AI investment cycle remains relatively early, where import substitution provides an additional structural growth driver, or where the potential for positive operational surprise remains meaningful.

We also added to a select group of consumer-related stocks including Laopu Gold, PDD Holdings and Meituan, where sharp de-ratings left the shares looking attractive relative to the quality and growth of the franchises. Meituan provides a good example of how we have actively managed position size as the risk-reward has changed. We materially reduced the holding through 2025 as competition in food delivery and instant retail intensified and threatened near-term profitability. As the valuation became more attractive and competitive intensity began to ease, we started adding again during the summer of 2026, reflecting our continued confidence in Meituan's long-term competitive position.

Elsewhere, we added more differentiated cyclical exposures to broaden the portfolio's return drivers. We initiated a new holding in Anhui Conch Cement as a targeted way of gaining exposure to any improvement in property-related activity and urban renewal. Air China and PetroChina provided additional exposure to a recovery in domestic travel and to the energy sector respectively.

Complete sales were similarly driven by changes in prospective returns and opportunity cost. We exited DPC Dash and Haidilao International as we concentrated our consumer exposure in franchises where we saw a more attractive combination of quality, growth and valuation. We also sold Kingsoft and Kingdee International Software in software, Dongguan Yiheda Automation and Estun Automation in advanced manufacturing, and Silergy in analogue semiconductors as conviction weakened or more compelling opportunities emerged elsewhere in the portfolio.

Overall, the pattern of activity reflects our intent to keep the portfolio focused on a concentrated set of high-conviction growth companies, while remaining willing to adjust exposures as fundamentals, valuations and the opportunity cost of capital evolve.

Performance

Over the six months to 31 July 2026, the Company delivered a NAV total return of -0.9%, compared with -5.6% for the MSCI China All Shares Index (in sterling terms). Relative performance was driven overwhelmingly by stock selection, which added approximately 9 percentage points and more than offset a 4 percentage point drag from sector allocation. This resulted in about 5 percentage points of relative outperformance over the period.

Private companies were particularly important relative contributors. At the end of July, the Company held two private investments, ByteDance and RedNote, which together represented 16.7% of total assets. ByteDance was the single largest contributor, adding approximately 3.9 percentage points to relative returns as its valuation increased by 27% over the period. This reflected continued strong operating progress: Q1 revenue grew 31% year-over-year, ahead of the selected peer group, while the business continues to generate substantial profits and cash. The investment case has also broadened materially. ByteDance is no longer simply a short-video and advertising business: ecommerce has become increasingly important, its international revenues have grown, and the company is investing heavily behind AI infrastructure and products. The agreement surrounding TikTok's US operations also reduced an important source of regulatory uncertainty.

Our second private holding, RedNote, also performed strongly, with its valuation rising approximately 37% over the period. The business continues to combine unusually rapid growth with improving profitability: 2025 revenues grew approximately 50%, while operating margins reached double digits, having turned positive only two years earlier. We continue to be attracted by the quality of its user base and the strength of its position at the intersection of content, search and commerce. RedNote has around 350 million monthly active users, with particularly strong penetration among affluent younger consumers, while search activity on the platform is already equivalent to roughly half that of Baidu. Its large body of user-generated content also provides a potentially valuable foundation for AI-driven search, recommendation and commerce.

Among listed holdings, information technology was the next-largest source of relative outperformance. Zhongji Innolight, NAURA Technology Group, Advanced Micro-Fabrication Equipment and Montage Technology all contributed positively as demand remained strong across AI infrastructure and China's domestic semiconductor supply chain. The same thematic strength also benefited holdings outside the information technology sector: Shandong Sinocera Functional Material in materials and Weichai Power in industrials both performed strongly, helped by their exposure to semiconductor-related demand. CATL and Midea Group were further notable stock-specific contributors.

The principal offset came from sector positioning. Financials detracted about 1.5 percentage points, largely reflecting our significant underweight to a sector that performed relatively well over the period. Ping An, a leading insurance company, was also a modest detractor, giving back some of the strong gains made previously despite continued solid operating progress, as investors favoured lower-valued, higher-yielding bank shares. Bank shares were supported by signs that earnings had begun to stabilise as funding costs fell and net interest margins improved, while low valuations and attractive dividend yields continued to draw investor demand. Energy was also a drag, while our overweight to consumer discretionary detracted modestly as the weak domestic consumer environment weighed on the sector.

At the stock level, relative detractors were more dispersed. Zijin Gold International and Zijin Mining Group were among the larger detractors as precious-metal prices corrected from the exceptional levels reached earlier in the year, reversing some of the strong share-price gains made previously. Pop Mart also detracted following a period of very strong performance, as investors reassessed the expectations embedded in its valuation despite continued strength in the underlying franchise. Several more recent purchases, including Anhui Conch and Air China, also detracted shortly after purchase. In both cases these positions were initiated against still-weak industry backdrops: Anhui Conch as a low-cost way of gaining exposure to any eventual improvement in property-related activity and urban renewal, and Air China as a differentiated cyclical exposure where the recovery in profitability remains dependent on demand, capacity and input costs.

In absolute terms, Tencent and Alibaba were also among the larger detractors over the period, although their impact on relative performance was limited given our modest overweight positions. In both cases, investors have become increasingly focused on the scale of AI-related investment and the pace at which this spending can translate into revenues and attractive returns. At Tencent, the sharp increase in spending has weighed on near‑term cash flow, but we believe part of this pressure is temporary and evidence of monetisation is beginning to emerge through accelerating cloud growth and rising paid usage of its AI products. Its distribution through Weixin and the wider Tencent ecosystem, together with improving proprietary models, gives us confidence that the economics can improve as usage scales. At Alibaba, we remain encouraged by the strength of its vertically integrated AI offering across chips, Qwen models and cloud infrastructure, where AI-related revenues continue to grow rapidly. We believe the market is underestimating the long-term value of both its cloud and ecommerce businesses.

The Company also maintained modest gearing over the period, averaging about 4.2% on a gross basis. As the portfolio delivered a negative absolute return, this gearing detracted modestly from relative performance.

Overall, the pattern of performance was encouraging. As in the previous year, relative returns were driven primarily by stock selection rather than broad sector positioning. Strong performance from both our private holdings and several AI and advanced-manufacturing companies more than offset allocation headwinds elsewhere in the portfolio.

Outlook

Looking ahead, we expect the Chinese economy to remain uneven rather than move into a broad-based recovery. The key domestic variable is whether weakness in property and consumption begins to stabilise sufficiently to improve household and corporate confidence. We do not expect a return to the large, credit-fuelled stimulus of previous cycles. Policy support is more likely to remain targeted and incremental. Even so, given how weak expectations have become in parts of the domestic economy, relatively modest improvement could have a meaningful impact on sentiment and valuations.

AI and advanced manufacturing should remain important growth drivers. The investment cycle in China still appears relatively early, and the key question is whether current supply constraints begin to ease. We will be watching the ramp in domestic graphics processing units (GPUs), the specialised chips used to train and run AI models, and memory capacity, the pace of cloud capital expenditure and whether AI adoption broadens further into physical applications such as robotics. Import substitution should provide an additional multi-year source of demand, while the continued emergence of companies such as CXMT and Unitree reinforces our view that the investable opportunity set is still expanding rather than narrowing.

The opportunity therefore remains unusually two-sided. In parts of the domestic economy, expectations are sufficiently depressed that stabilisation rather than a full recovery could support attractive returns. Conversely, in areas of technology where valuations have risen sharply, strong operational delivery will increasingly be required to justify expectations. Maintaining discipline on both sides of that divide will remain central to our approach.

Geopolitical uncertainty will remain part of the backdrop, particularly around technology and trade. We therefore continue to focus on the economic consequences for individual companies rather than attempting to predict political outcomes. In an increasingly two-speed economy, our focus remains unchanged: to identify exceptional businesses exposed to structural growth, remain disciplined where expectations have run ahead of fundamentals, and use periods of market dispersion to improve the prospective return of the portfolio.

Baillie Gifford & Co

The principal risks and uncertainties facing the Company are set out below. Related party transaction disclosures are set out in note 9 below.

For a definition of terms see Glossary of terms and alternative performance measures below.

Past performance is not a guide to future performance.

Baillie Gifford - valuing private companies

We aim to hold our private company investments at 'fair value', i.e. the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations committee at Baillie Gifford, which takes advice from an independent third party (S&P Global). The portfolio managers feed into the process, but the valuations committee owns the process and the portfolio managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. For investment trusts, the prices are also reviewed twice per year by the respective investment trust boards and are subject to the scrutiny of external auditors in the annual audit process.

Beyond the regular cycle, the valuations team also monitors the portfolio for certain 'trigger events'. These may include: changes in fundamentals; a takeover approach; an intention to carry out an initial public offering; or changes to the valuation of comparable public companies. The valuations team also monitors relevant market indices on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate. When market volatility is particularly pronounced the team do these checks daily. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value. There is no delay.

Distribution of total assets^† (unaudited)

Sector at 31 July 2026

^†            Total assets before deduction of loans.

Past performance is not a guide to future performance.

List of investments

at 31 July 2026 (unaudited)

^*    Total assets before deduction of loans.

^⁋    Denotes unlisted investment (private company).

^†    Includes investment in American Depositary Receipt (ADR).

^#    Delisted on 27 October 2025.

Income statement (unaudited)

The total column of this statement represents the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return after taxation is both the profit and comprehensive income for the period.

The accompanying notes below are an integral part of the Financial Statements.

Balance sheet (unaudited)

^*    See Glossary of terms and alternative performance measures below.

The accompanying notes below are an integral part of the Financial Statements.

Statement of changes in equity (unaudited)

Six months to 31 July 2026

Six months to 31 July 2025

^*    The Capital reserve as at 31 July 2026 includes investment holding gains of £17,325,000 (31 July 2025 - losses of £7,160,000).

The accompanying notes below are an integral part of the Financial Statements.

Condensed statement of cash flows (unaudited)

^*    Cash from operations includes dividends received in the period of £2,104,000 (31 July 2025 - £2,114,000) and deposit interest received of £3,000 (31 July 2025 - £5,000).

^†    Cash and cash equivalents represent cash at bank and short term money market deposits repayable on demand.

The accompanying notes below are an integral part of the Financial Statements.

Notes to the financial statements (unaudited)

01      Basis of accounting

The condensed Financial Statements for the six months to 31 July 2026 comprise the statements set out above together with the related notes below. They have been prepared in accordance with FRS 104 'Interim Financial Reporting' and the AIC's Statement of Recommended Practice issued in December 2025. They have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The Financial Statements for the six months to 31 July 2026 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 31 January 2026.

Going concern

The Directors have considered the nature of the Company's assets, its liabilities, projected income and expenditure together with its investment objective and policy, dividend policy and principal risks and uncertainties, as set out below. The Board has, in particular, considered the impact of heightened market volatility due to macroeconomic and geopolitical concerns, and reviewed the results of specific leverage and liquidity stress testing but does not believe the Company's going concern status is affected. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Financial Statements and confirm that they are not aware of any material uncertainties which may affect the Company's ability to continue to do so over a period of at least twelve months from the date of approval of these Financial Statements.

02      Financial information

The financial information contained within this Interim Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 31 January 2026 has been extracted from the statutory accounts
which have been filed with the Registrar of Companies.
The Auditor's Report on those accounts was not qualified, did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying the report, and did not contain a statement under sections 498(2) or (3) of the Companies Act 2006.

03      Investment manager

Baillie Gifford & Co Limited, a wholly owned subsidiary
of Baillie Gifford & Co, was appointed by the Company
as its Alternative Investment Fund Manager and Company Secretaries on 16 September 2020. The investment management function has been delegated to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. The management agreement is terminable on not less than three months notice or on shorter notice in certain circumstances. The annual management fee is (i) 0.75% of the first £50 million of net asset value; plus (ii) 0.65% of net asset value between £50 million and £250 million; plus (iii) 0.55% of net asset value in excess of £250 million, calculated and payable quarterly.

04      Net return per ordinary share

Net return per ordinary share is based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during each period.

There are no dilutive or potentially dilutive shares in issue.

05      Dividends

06      Fixed assets - investments

Fair value hierarchy

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are determined by the lowest (that is the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows:

Level 1 - using unadjusted quoted prices for identical instruments in an active market;

Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and

Level 3 - using inputs that are unobservable (for which market data is unavailable).

Investments in securities are financial assets designated at fair value through profit or loss on initial recognition. In accordance with FRS 102 the tables above provide an analysis of these investments based on the fair value hierarchy described above which reflects the reliability and significance of the information used to measure their fair value. During the six months, no investments were transferred from Level 1 to Level 2. New Horizon Health (Level 3) was suspended from trading in July 2025 and delisted on 27 October 2025; the holding remained valued at nil at 31 July 2026 and is included within delisted equities (31 January 2026 - nil).

^*    The delisted equities represent the investment in New Horizon Health, which was suspended from trading in July 2025 and subsequently delisted on 27 October 2025.

^†    The unlisted equities represent holdings in ByteDance and RedNote.

07      Bank loans

The Company has a one year US$25 million revolving credit facility with The Royal Bank of Scotland (International) Limited which expires on 9 April 2027. At 31 July 2026 creditors falling due within one year include borrowings of £7.9 million (HKD83 million) (31 January 2026 - £7.7 million (HKD83 million)) drawn down under the facility.

08      Share capital

The Company has authority to allot shares under section
551 of the Companies Act 2006 or sell shares held in treasury. Such authorities will only be used to issue shares or sell shares from treasury at, or at a premium to, net asset value and only when the Directors believe that it would be in the best interests of the Company to do so. In the six months to 31 July 2026 no ordinary shares were issued from treasury (in the year to 31 January 2026 no shares were issued from treasury).

The Company also has authority to buy back shares. In the six months to 31 July 2026, 2,881,292 ordinary shares were bought back and held in treasury (in the year to 31 January 2026, 1,728,219 ordinary shares were bought and held in treasury). At 31 July 2026, the Company had authority remaining to buy back a further 8,113,184 ordinary shares.

09      Related party transactions

There have been no transactions with related parties during the first six months of the current financial year that have materially affected the financial position or the performance of the Company during that period and there have been no changes in the related party transactions described in the last Annual Report and Financial Statements that could have had such an effect on the Company during that period.

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

10      Contingent asset

HMRC have indicated they will repay overpaid taxes for the accounting periods ending 2008 and 2009 of £1.1 million plus interest. As the repayment is probable, but not virtually certain, the Company is disclosing £1.1 million as a contingent asset.

11      Share Premium Account cancellation

On 19 August 2025, the High Court of Justice approved the cancellation of the amount standing to the credit of the Company's share premium account and the crediting of an equivalent amount to the Company's Distributable Capital Reserve. The Court Order became effective when it was filed with the Registrar of Companies on 22 August 2025.

Principal risks and uncertainties

The principal risks facing the Company are financial risk, investment strategy risk, discount risk, regulatory risk, custody and depositary risk, operational risk, leverage risk, climate and governance risk, cyber security risk, single country risk, emerging market risk, unlisted securities risk, and emerging risks. An explanation of these risks and how they are managed is set out on pages 35 to 41 of the Company's Annual Report and Financial Statements for the year to 31 January 2026 which is available on the Company's website: bailliegiffordchinagrowthtrust.com. The principal risks and uncertainties have not changed since the date of the Annual Report.

The Board is mindful of the risk that geopolitical developments could adversely impact companies held within the Company's investment portfolio, including the potential impact of sanctions, and such matters are evaluated both in conjunction with the manager and, where appropriate, with input from external advisers.

Responsibility statement

We confirm that to the best of our knowledge:

a.          the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';

b.          the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months, their impact on the Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the year); and

c.          the Interim Financial Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

On behalf of the Board
Nicholas Pink
Chair
22 September 2026

Glossary of terms and alternative performance measures ('APM')

An alternative performance measure ('APM') is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.

The APMs noted below are commonly used measures within the investment trust industry and serve to improve comparability between investment trusts.

Total assets

This is the Company's definition of adjusted total assets, being the total value of all assets less current liabilities, before deduction of all borrowings.

Net asset value

Net asset value is the value of total assets less liabilities (including borrowings). The net asset value per share ('NAV') is calculated by dividing this amount by the number of ordinary shares in issue (excluding treasury shares).

Net liquid assets

Net liquid assets comprise current assets less current liabilities, excluding borrowings.

Net asset value (borrowings at book value) (APM)

Discount/premium (APM)

As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV it is said to be trading at a discount. The size of the discount is calculated by subtracting the NAV from the share price and is usually expressed as a percentage of the NAV. If the share price is higher than the NAV it is said to be trading at a premium.

Total return (APM)

The total return is the return to shareholders after reinvesting the dividend on the date that the share price goes ex-dividend.

^*    The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the cum income NAV/share price, as appropriate, at the ex-dividend date.

Ongoing charges ratio (APM)

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value. The ongoing charges are calculated on the basis prescribed by the Association of Investment Companies.

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' funds is called 'gearing'. If the Company's assets grow, the shareholders' funds grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Gross gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

Gearing is the Company's borrowings adjusted for cash and cash equivalents expressed as a percentage of shareholders' funds.

Leverage (APM)

For the purposes of the UK Alternative Investment Fund Managers Regulations, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Active share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Unlisted (Private) Company

An unlisted (private) company means a company whose shares are not available to the general public for trading and not listed on a stock exchange.

Variable Interest Entity ('VIE')

VIE structures are used by some Chinese companies to facilitate access to foreign investors in sectors of the Chinese domestic economy which prohibit foreign ownership. The purpose of the VIE structure is to give the economic benefits and operational control of ownership without direct equity ownership itself. The structures are bound together by contracts and foreign investors are not directly invested in the underlying company.

Treasury shares

The Company has the authority to make market purchases of its ordinary shares for retention as treasury shares for future reissue, resale, transfer or for cancellation. Treasury shares do not receive distributions and the Company is not entitled to exercise the voting rights attaching to them.

Further shareholder information

How to invest

Baillie Gifford China Growth Trust's shares are traded on the London Stock Exchange. They can be bought by placing an order with a stockbroker, or by asking a professional adviser to do so. If you are interested in investing directly in Baillie Gifford China Growth Trust you can do so online. There are a number of companies offering real time online dealing services. Find out more by visiting the investment trust pages at bailliegifford.com.

Share register enquiries

Computershare Investor Services PLC maintains the share register on behalf of the Company. In the event of queries regarding shares registered in your own name, please contact the Registrars on 0370 707 1410.

Automatic exchange of information

In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Baillie Gifford China Growth Trust is required to collect and report certain information about certain shareholders.

The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. As an affected company, Baillie Gifford China Growth Trust will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.

Shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders gov.uk/government/publications/exchange-of-information-account-holders.

Risk warnings

Past performance is not a guide to future performance.

The Company is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority.

The staff of Baillie Gifford & Co and Baillie Gifford China Growth Trust Directors may hold shares in Baillie Gifford China Growth Trust and may buy or sell such shares from time to time.

Further details of the risks associated with investing in the Company, including a Key Information Document and how charges are applied, can be found at bailliegiffordchinagrowthtrust.com
or by calling Baillie Gifford on 0800 917 2113.

The information and opinions expressed within this Interim Financial Report are subject to change without notice. This information has been issued and approved by Baillie Gifford & Co Limited, the Managers and Secretaries, and does not in any way constitute investment advice.

Third party data provider disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.

No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

MSCI index data

The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction.

The MSCI information is provided on an 'as is' basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the 'MSCI Parties') expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability or any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (msci.com).

Baillie Gifford China Growth Trust aims to achieve long term capital growth through investment principally in Chinese companies which are believed to have above average prospects for growth. At 31 July 2026 the Company had total assets of £192.5m.

You can find up-to-date performance information about Baillie Gifford China Growth Trust at bailliegiffordchinagrowthtrust.com^‡.

Baillie Gifford China Growth Trust is managed by Baillie Gifford, the Edinburgh based fund management group with around £197 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 30 June 2026).

Investment Trusts are UK public limited companies and are not authorised or regulated by the Financial Conduct Authority.

^‡Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

Past performance is not a guide to future performance. The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. This is because the share price is determined by the changing conditions in the relevant stock markets in which the Company invests and by the supply and demand for the Company's shares.

For further information please contact:

Naomi Cherry, Baillie Gifford & Co

Tel: 0131 275 2000

Jonathan Atkins, Director, Four Communications

Tel: 0203 920 0555 or 07872 495396