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Profit growth loses momentum in August
Profits at China’s major industrial companies rose 15.7% in the first eight months of the year compared with the same period last year, the National Bureau of Statistics said on the 28th.
The figures cover industrial companies with annual revenue of at least 20 million yuan. The January-to-August increase slowed from 17.6% during the first seven months of the year.
In August alone, industrial profits grew 4.2% from a year earlier, down sharply from July’s 11.2% increase. The statistics agency attributed the slowdown in part to a high comparison base from August of the previous year.
Profits at state-owned companies increased 10.3% to 1.676 trillion yuan, while those at joint-stock companies rose 20.4% to 4.071 trillion yuan. Private companies posted a 10.4% increase to 1.321 trillion yuan, and foreign-invested companies, including businesses backed by investors from Hong Kong, Macao and Taiwan, recorded a 2.3% gain to 1.179 trillion yuan.
AI demand powers electronics industry
Mining profits rose 35.1%, while manufacturing profits increased 17.4%. Profits in electricity, heating, gas and water production and supply fell 12%.
Electronics was a standout as demand linked to artificial intelligence and other emerging technologies expanded. Profits among manufacturers of computers, communications equipment and other electronics jumped 110% from a year earlier.
Demand from new-energy vehicles, internet-connected devices and computing centers helped lift profits for optoelectronic component makers by 72% and semiconductor component manufacturers by 51.8%. Profits in optical fiber manufacturing surged 530%, while optical cable makers posted a 100% increase amid greater investment in computing infrastructure.
Profits also rose 82.9% in nonferrous metal smelting and processing and 51% in chemical raw materials and chemical products. Coal mining and washing profits increased 51.6%, while profits among makers of alcoholic beverages, other drinks and refined tea fell 34.7%.
Yu Weining, a senior industrial statistician at the National Bureau of Statistics, said the rapid adoption of technologies led by AI had increased demand in related fields and driven strong profit growth in electronics.
Weak consumption remains a drag
China’s AI boom has not eliminated broader economic pressures. Weak consumer demand and excess production capacity in some industries continue to limit companies’ ability to raise prices.
Concerns over China’s trade surplus and geopolitical tensions have also prompted warnings that the economy could become more dependent on exports. Some analysts have cautioned that the spread of AI may deepen and prolong the imbalance between China’s strong supply and sluggish demand.
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