AI, chips fuel sharp rise in China industrial profits

China’s industrial sector recorded strong profit growth in the first quarter of 2026, as proactive macroeconomic policies helped offset the effects of a complex economic environment and strengthened momentum in high-end manufacturing. According to official data, profits of major industrial firms rose by 15.5 percent year on year, reaching 1.696 trillion yuan (approximately 247.3 billion U.S. dollars) in the January–March period. This marks an acceleration of 0.3 percentage points compared with growth recorded in the first two months of the year. In March alone, profits of major industrial companies increased by 15.8 percent compared with the same period a year earlier. The growth rate also quickened by 0.6 percentage points compared with the January–February period. NBS statistician Yu Weining noted that Chinese authorities had strengthened macroeconomic support by introducing more proactive policies aimed at stabilizing growth. These measures contributed to a steady recovery in the industrial sector and an improvement in corporate profitability. Equipment manufacturing continued to be a key driver of profit growth, with profits in this sector rising by 21 percent, contributing 6.8 percentage points to overall industrial profit growth. The sector’s share of total profits among major industrial firms increased to 33.7 percent, up 1.7 percentage points from a year earlier. Within equipment manufacturing, the electronics industry saw a sharp 124.5 percent surge in profits, supported by strong production and price recovery. Profits in railway, shipbuilding, and aerospace manufacturing rose by 16.7 percent, an increase of 5.3 percentage points compared with the January–February period. High-tech manufacturing also delivered strong performance, with profits increasing by 47.4 percent in the first quarter and contributing 7.9 percentage points to overall industrial profit growth. The rapid expansion of artificial intelligence and semiconductor-related industries further boosted results. Profits in optical fiber manufacturing rose by 336.8 percent, while optoelectronic device manufacturing increased by 43 percent, and display device manufacturing grew by 36.3 percent. Growing demand for smart products supported the sector, with profits in intelligent drone manufacturing rising by 53.8 percent and other smart consumer equipment manufacturing increasing by 67.3 percent. Despite the overall improvement, the National Bureau of Statistics cautioned that uncertainties in the external environment remain high, and structural imbalances between supply and demand within the domestic economy still need to be addressed.