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China's Industrial Profits Jump 14.4% in September as AI-Linked Electronics Earnings More Than Double

Profits at China's large industrial firms rose 14.4% in September and 15.5% in the first nine months, led by electronics, while autos, steel and building materials lost ground.

Oct 27, 2026 - 07:14

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Profits at China's large industrial companies grew at a faster pace in September, as demand tied to artificial intelligence lifted electronics makers and raw-material producers while several consumer-facing and heavy industries continued to lose ground. Industrial profits rose 14.4% from a year earlier in September, the National Bureau of Statistics (NBS) said on Tuesday, October 27, 2026, accelerating from a 4.2% increase in August, Reuters reported.

For the January-to-September period, profits at industrial firms with annual main-business revenue of at least 20 million yuan totaled 6.03 trillion yuan (60,337.4 billion yuan), up 15.5% on a comparable basis. That was little changed from the 15.7% growth recorded for the first eight months of the year, according to Reuters. CNBC said September's gain was the strongest monthly pace since June.

Electronics drive the gains

The computer, communication and other electronic equipment manufacturing category posted a 103.8% rise in profits over the nine months, the NBS data showed. In an accompanying interpretation, NBS chief statistician Yu Weining said the electronics industry alone added 9.6 percentage points to overall industrial profit growth.

Yu attributed the strength to demand for AI computing power and advanced memory. Profits at makers of specialized electronic materials rose 220%, while semiconductor discrete device manufacturers posted a 51.7% gain. Optoelectronic device makers and electronic circuit manufacturers recorded increases of 69.8% and 62.5%, respectively. Data center construction pushed profits at optical fiber manufacturers up more than fivefold over the nine-month period, according to the bureau.

High-tech manufacturing as a whole grew profits by 52.0%, 36.5 percentage points faster than industry overall, and accounted for 25.5% of total industrial profits, 6.2 percentage points more than a year earlier, the NBS said.

Commodities help, other sectors lag

Raw-material manufacturers increased profits by 44.9%, contributing 5.9 percentage points to overall growth, China Daily reported, citing the NBS. Demand for copper and aluminum from AI and new-energy applications helped nonferrous metal smelting and processing profits climb 79.7%, while higher international crude prices supported a 49.2% rise in the chemicals sector. Petroleum refining swung from a loss to a profit of 84.22 billion yuan.

By broad sector, mining profits increased 38.2% and manufacturing profits rose 17.0%, while profits in electricity, heat, gas and water production and supply fell 14.3%. Coal mining profits rose 57.0% and oil and gas extraction gained 21.3%.

Several industries moved in the opposite direction. Automobile manufacturing profits fell 22.8%, non-metallic mineral products dropped 46.9%, and ferrous metal smelting and processing, which includes steel, slumped 73.3%. Agricultural and food processing profits declined 17.3%, and power and heat generation fell 17.9%. Reuters noted that furniture manufacturing profits fell by more than half over the period.

Ownership and balance-sheet details

Profits at state-controlled enterprises rose 13.1% in the first nine months, joint-stock companies posted a 20.8% gain and private firms recorded an 8.7% increase, according to the NBS release. Foreign-invested firms, including those funded from Hong Kong, Macao and Taiwan, saw profits edge up 0.5%.

Total revenue for large industrial firms reached 106.21 trillion yuan, up 6.6%, while operating costs rose 6.1%. The profit margin on revenue widened to 5.68%, 0.44 percentage points higher than a year earlier. At the end of September, the firms' debt-to-asset ratio stood at 58.6%, up 0.4 percentage points. Accounts receivable grew 10.0% to 29.77 trillion yuan, and finished-goods inventories rose 11.6% to 7.37 trillion yuan. The average collection period for receivables lengthened by 1.3 days to 71.6 days.

A divided economy

"This suggests that domestic and external demand generated by the development of the AI supply chain has become a key force supporting industrial profits," Ding Meng, chief China economist at CITIC Bank International, told Reuters. "Barring a major reversal in the global AI investment boom, industrial profits are expected to continue growing at a rapid pace."

Other economists pointed to weakness in household demand. Shena Yue, senior economist at Oxford Economics, told CNBC that the property downturn continues to weigh on housing purchases and related durable goods. "China's export strength isn't able to fully offset its domestic weakness," she said. CNBC noted that retail sales grew 1.1% in September and that factory-gate prices rose at their fastest pace since mid-2022, driven by higher energy and raw-material costs linked to the Middle East conflict.

China's economy expanded 4.5% year on year in the third quarter, bringing growth for the first nine months to 4.6%, within the government's full-year target range of 4.5% to 5%, according to CNBC. Dan Wang, China director at Eurasia Group, told the network that policymakers see little urgency for major new stimulus, while most manufacturers operate on very thin margins.

Reuters also flagged pressure at the company level, noting that net profit growth at electric vehicle battery maker CATL slowed sharply last quarter amid intense competition, and that export-oriented firms face uncertainty as widening trade surpluses strain relations with partners, particularly in Europe. Yu said China will continue to use macroeconomic policy to support growth, expand domestic demand and optimize supply.

Market backdrop

The benchmark CSI 300 index entered a bear market late last week, CNBC reported, as concern over the breadth of corporate profitability weighed on Chinese equities. On Tuesday the index closed 1.32% lower, even as Japan's Nikkei 225 rose 1.73% and South Korea's Kospi gained 3.09%.