China's Industrial Profits Jump 14.4% in September, Fastest in Three Months, as Electronics Earnings Double

Profits at China’s major industrial companies grew 14.4% year on year in September, the fastest pace in three months, as electronics makers and high-tech manufacturers posted sharp gains, official data released on Tuesday showed, Xinhua reported.

The September figure from the National Bureau of Statistics (NBS) accelerated from a 4.2% rise in August, according to Reuters, and beat the 12% forecast by Bloomberg Economics, Bloomberg reported. For January to September, profits rose 15.5% to 6.03 trillion yuan (about US$904.7 billion), CGTN said, largely unchanged from the 15.7% growth recorded for the first eight months, per Reuters.

The data cover industrial firms with annual main business revenue of at least 20 million yuan.

Electronics and high-tech lead gains

Profits in the electronics sector doubled from a year earlier, contributing 9.6 percentage points to overall industrial profit growth, according to the NBS figures cited by Xinhua and CGTN. Within the sector, profits at electronic specialty materials manufacturers surged 220%, while semiconductor discrete device makers saw a 51.7% rise, Xinhua reported.

High-tech manufacturing profits climbed 52%, outpacing the overall industrial average by 36.5 percentage points. The segment accounted for 25.5% of total industrial profits in the first three quarters, up 6.2 percentage points from a year earlier.

Over the nine months, mining profits rose 38.2% and manufacturing profits 17.0%, while profits in the production and supply of electricity, heat, gas and water fell 14.3%, CGTN reported. Reuters noted that furniture manufacturing profits fell by more than half.

NBS statistician Yu Weining attributed the growth to stronger macroeconomic policy support, steady industrial production and faster development of “new quality productive forces”, according to Xinhua.

Gains concentrated in a few sectors

Bloomberg reported that factory-gate prices rose 5% year on year in September, the fastest pace since 2022, and said this likely contributed to the rebound. It linked the price rise to soaring oil costs as hostilities flare in the Middle East, as well as higher costs for AI hardware and related raw materials. Raw materials industries posted a 45% profit gain, adding 5.9 percentage points to growth, according to Bloomberg.

Eric Zhu of Bloomberg Economics said the September rebound likely reflected higher energy and AI hardware prices, with gains “still concentrated in a narrow set of related sectors.” Bloomberg added that sluggish consumption and slumping government spending were weighing on businesses that depend on the domestic market.

Reuters described the recovery as unbalanced, even after third-quarter GDP grew a stronger-than-expected 4.5%, putting China within reach of its 4.5% to 5.0% annual growth target. It said export-oriented firms face greater uncertainty as expanding trade surpluses stoke tensions with trading partners, particularly Europe, and noted that battery maker CATL’s net profit growth slowed sharply last quarter amid intense competition. CATL reported a 14.54% rise in third-quarter net profit to 21.246 billion yuan, BigGo Finance reported.

Chinese stocks have entered a bear market, with US$2.4 trillion in value lost since a May peak, Bloomberg said, adding that MSCI China members that have reported results so far missed consensus earnings forecasts by an average of 9%.

What’s next

Ding Meng, chief China economist at CITIC Bank International, told Reuters that AI “has become a key force supporting industrial profits” and that profits are expected to keep growing quickly, barring a major reversal in the global AI investment boom.

Wen Bin, chief economist at China Minsheng Bank, told Xinhua that profit growth could come under near-term pressure before stabilising in the fourth quarter, helped by recovering prices and the rollout of 800 billion yuan in new policy-based financial instruments. He pointed to risks from tightening global monetary conditions, uncertainty over US trade policies, geopolitical tensions and swings in energy prices.

Yu of the NBS said China will continue to use macroeconomic policies to support growth, expand domestic demand and optimise supply, Reuters reported.

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