China Industrial Profits Rise 18.7% in First Half of 2026 as AI Demand Booms

Chinese industrial profits grew 18.7% year-on-year in the first half of 2026, totaling 3,947.9 billion yuan according to National Bureau of Statistics data. The expansion accelerated by 3.2 percentage points compared to the first quarter, backed by explosive growth in computing infrastructure, artificial intelligence integration, and raw materials production. The electronics sector saw profits surge 96.9%, single-handedly contributing 8.5 percentage points to overall industrial earnings growth. Operating revenue profit margins reached 5.70%, marking the highest cumulative level recorded since 2024.

The 18.7% surge in industrial earnings signals a steady recovery in China's real economy, driven primarily by advanced tech manufacturing and the nationwide expansion of AI computing infrastructure. Higher profit margins indicate improved operating efficiency, though the divergence between large tech manufacturers, utility providers, and smaller enterprises points to uneven underlying recovery dynamics.

China's major industrial enterprises recorded an 18.7% year-on-year increase in total profits during the first half of 2026, reaching 3,947.9 billion yuan, according to data released on July 27 by the National Bureau of Statistics (NBS). The growth rate accelerated by 3.2 percentage points compared to the pace set in the first quarter. In June alone, nationwide industrial profits increased by 15.1% year-on-year. The acceleration was primarily driven by a surge in demand for artificial intelligence hardware and computing infrastructure. Profits across the electronics manufacturing sector skyrocketed by 96.9% year-on-year in the first six months, contributing 8.5 percentage points to overall industrial profit growth. Sub-sectors linked directly to computing recorded extreme growth: profits in computer assembly manufacturing and computer peripheral manufacturing rose 689.3% and 305.8%, respectively. Integrated circuit manufacturing profits expanded by 2,579.5%, while semiconductor discrete device manufacturing recorded a 31.2% gain. Advanced manufacturing and emerging technical equipment sectors also registered solid profit expansions. Optical fiber manufacturing and optical cable manufacturing profits climbed 410.4% and 39.8% year-on-year, respectively. Additive manufacturing equipment makers saw profits rise 55.4%, while specialized semiconductor equipment manufacturing profits increased 18.7%. Concurrently, the raw materials manufacturing sector posted a 71.7% profit surge, adding 8.8 percentage points to overall industrial earnings growth. Performance varied across broader sector categories and ownership structures. Mining sector profits rose 33.5% year-on-year, and manufacturing profits grew 20.1%. However, the utility sector—covering electricity, heat, gas, and water supply—saw profits decline by 4.2%. By enterprise classification, joint-stock enterprises and state-holding enterprises posted profit increases of 24.7% and 17.9%, respectively. Large enterprises saw profits grow by 20.3%, medium-sized enterprises by 21.3%, and small enterprises by 12.9%. Profitability metrics across industrial operations improved alongside revenue growth. The operating revenue profit margin for major industrial enterprises reached 5.70% in the first half, up 0.59 percentage points from the same period last year. NBS data noted this as the highest cumulative monthly operating margin achieved since 2024.