Nearly two-thirds of China's industrial profit growth now comes from one AI-linked sector, while autos, steel and building materials post steep declines.
China’s industrial companies earned RMB6.03 trillion in the first nine months of 2026, up 15.5% from a year earlier, and makers of computers, communications gear and other electronics supplied most of that growth. The National Bureau of Statistics (NBS) said on October 27 that electronics led the gains. September alone brought a 14.4% gain, up from 4.2% in August, according to a Bloomberg report republished by Energy Connects, the fastest pace in three months.
The bureau’s own explanation puts artificial intelligence at the center. Yu Weining, chief statistician of the NBS industry department, wrote in his interpretation of the data that demand from AI computing and advanced memory drove electronics, which on its own lifted total industrial profit growth by 9.6 percentage points. That is close to two-thirds of the 15.5% headline figure.
The rest of the economy looks very different. Profits fell sharply in autos, steel, building materials and food processing, and private companies grew earnings far more slowly than state-controlled ones. For investors, the data confirm what listed-company results have shown all month: China’s profit recovery is real, but narrow.
AI hardware and data centers lift a small group of industries
The computer, communications and electronic equipment industry earned RMB985.19 billion in the first nine months, up 103.8% from a year earlier. The NBS commentary traced the gains through the AI supply chain. Profits at makers of electronic specialty materials rose 220%, and semiconductor discrete devices gained 51.7%. Building computing capacity and data centers pushed profits at optical fiber makers up 570% and at optical cable makers up 110%. Computer peripherals rose 280%, complete computers 170% and industrial control computers 90.9%.
21st Century Business Herald reported that optoelectronic components and electronic circuit manufacturing, which includes the circuit boards inside servers, grew profits 69.8% and 62.5%. Those gains match the earnings season so far, in which memory makers such as CXMT have forecast sharp profit increases.
High-tech manufacturing as a whole grew profits 52.0%, 36.5 percentage points faster than all industry, and its share of total industrial profits rose to 25.5%, up 6.2 points from a year earlier. AI demand also reached further up the supply chain: the NBS said strong demand for copper and aluminum from AI and new energy helped lift profits in nonferrous metals by 79.7%.
Oil prices did the rest, while consumer industries fell behind
Energy was the second engine. Oil and gas extraction profits rose 21.3%, and petroleum and coal processing swung from a loss a year earlier to a profit of RMB84.22 billion, which the NBS linked to higher international crude prices. Mining profits overall rose 38.2%, ahead of manufacturing at 17.0%. Electricity, heat, gas and water suppliers saw profits fall 14.3%.
Further down the list, the declines were steep. Steel smelting profits fell 73.3%, nonmetallic mineral products such as cement and glass fell 46.9%, auto manufacturing fell 22.8% and agricultural food processing fell 17.3%. Profits at private companies rose 8.7% and at foreign-invested companies just 0.5%, against 13.1% at state-controlled firms.
Eric Zhu of Bloomberg Economics said the September rebound likely reflected higher energy and AI hardware prices, and that outside those segments the broader corporate sector continued to struggle. Bloomberg reported that factory-gate prices rose 5% in September, the fastest since 2022, which flatters profit growth in industries able to pass costs on.
Margins improved slightly across industry as a whole. Revenue rose 6.6% to RMB106.21 trillion, and profit per RMB100 of revenue reached RMB5.68, up 0.44 points. Inventories of finished goods were 11.6% higher than a year earlier, and receivables 10.0% higher.
The fourth quarter will test how long the electronics boom lasts
Chinese economists expect the cumulative growth rate to slow slightly from here because of a higher base from last year. Ming Ming, chief economist at CITIC Securities, told 21st Century Business Herald that strong support from new growth drivers should still keep full-year growth fairly fast. Bai Wenxi of the China Enterprise Capital Alliance said September’s double-digit gain showed that growth had not stalled. Zhang Di of China Galaxy Securities described a pattern of slightly slower cumulative growth, a stronger single month and widening differences between industries.
Xinhua reported that Wen Bin of China Minsheng Bank expects profit growth to face pressure in the near term before stabilizing in the fourth quarter, citing global monetary conditions, US trade policy and energy prices.
The NBS itself called for stronger domestic demand and a faster shift from old to new growth drivers in the months ahead. The October industrial data, due in late November, will show whether electronics can keep contributing close to 10 percentage points to growth, or whether memory and server prices start to ease.