China’s industrial profits grew at their strongest pace since June, as a boom in manufacturing tied to artificial intelligence offset drag from persistently weak domestic demand.
Profits at large industrial firms rose 14.4% last month from a year earlier, official data released Tuesday showed. For the first nine months of this year, industrial profits climbed 15.5%, slightly below the 15.7% rise in the January-September period.
The strength comes as industrial earnings swung to double-digit growth earlier this year, following a modest gain in 2025 after three straight years of declines, helped by Beijing’s efforts to curb rampant price wars across sectors and surging demand for AI-related equipment.
The global AI boom and higher commodity prices stemming from the war in Iran have lifted earnings at miners, chipmakers and raw-material suppliers this year, even as downstream manufacturers face rising input costs and weak domestic demand.
Earnings growth in high-tech sectors, such as AI and robotics, has been outperforming profits in consumer-related industries, including clothing, autos and furniture.
China’s economy expanded 4.5% in the third quarter from a year earlier, slightly faster than the previous quarter, taking growth in the first nine months to 4.6%, within the government’s full-year target range of 4.5% to 5%.
Consumption remains soft, with retail sales growing 1.1% in September, beating forecasts but only marginally above August’s weak reading.
With concerns mounting over local government debt and the benefits of consumer trade-in subsidies fading, Beijing has so far held back from major new stimulus for domestic demand.
High-tech manufacturing investment and electronics capacity utilization remain resilient, supported by the global AI cycle and domestic policy priorities, said Shena Yue, senior economist at Oxford Economics. Overall investment and industrial utilization are still subdued, she said.
Household demand is the weak link as the property downturn continues to weigh on housing purchases and related durables, Yue said.
“China’s export strength isn’t able to fully offset its domestic weakness,” she said.