China industrial profits post strongest growth in three months as tech boom widens economic divide

China's industrial profits grew at their strongest pace last month 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% in September from a year earlier, according to data released Tuesday by the National Bureau of Statistics . 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 for miners, chipmakers and raw-material suppliers this year, even as downstream manufacturers face rising input costs and weak domestic demand.

The uptick in earnings came as factory-gate prices rose at their fastest pace since mid-2022 , driven by higher energy and raw material prices amid the Middle East conflict.

Earnings growth in high-tech sectors, such as AI and robotics, has been outperforming profits in consumer-related industries, including clothing, autos and furniture, underscoring the increasingly bifurcated momentum in the economy.

NBS Chief Statistician Yu Weining attributed earnings growth mostly to surging profits in electronics and advanced-technology manufacturing sectors. Electronic special materials manufacturers saw profits more than triple, while they jumped 51.7% for semiconductor device equipment makers, as demand for AI computing power and storage over the nine months remained robust.

The buildout of AI computing power and data centers sent profits at optical fiber manufacturers more than sixfold higher, while those at cable makers more than doubled in the January-to-September period from a year earlier, according to Yu.

Raw material producers for copper and aluminum also benefited from rising demand from AI-related and renewable industries, with profits rising nearly 45% over the nine months.

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.