China's National Bureau of Statistics (NBS) reported in data released in August that profits at the country's major industrial enterprises — those with annual main business revenue of at least 20 million yuan — totaled 4.58 trillion yuan in the first seven months of 2026 (January-July), up 17.6 percent year on year. Over the same period, those enterprises posted operating revenue of 80.92 trillion yuan, up 6.5 percent, while operating costs rose 5.9 percent to 68.79 trillion yuan. The gap between revenue growth and cost growth gave companies room for faster profit gains, pointing to progress in cost control and operating efficiency across the industrial sector. As one of the closely watched monthly gauges of China's macroeconomic health, industrial profit data typically draws significant market attention, and the latest release extends a gradual recovery in industrial profit growth seen since the start of the year, offering an important reference point for assessing macroeconomic policy in the period ahead.

By category, profits at mining enterprises rose 34.9 percent year on year, while manufacturing profits climbed 18.8 percent to nearly 3.44 trillion yuan — the main driver of the overall gain and accounting for the bulk of total industrial profits. Manufacturing's profit growth outpaced both the industrial average and its own growth rate earlier in the year, reflecting a strengthening recovery in profitability across the sector that forms the backbone of the national economy. Analysts generally attributed the sustained improvement in manufacturing profits to a modest recovery in end-market demand, combined with companies' own efforts to lift production efficiency through technological upgrades, equipment renewal and digital transformation — a combination of factors that points to a steady and improving operating environment across the manufacturing sector.

Among manufacturing sub-sectors, the computer, communications and other electronic equipment manufacturing industry was the clear standout, with profits surging 110 percent — or 1.1-fold — year on year in the January-July period, the largest gain of any major category. Analysts attributed the surge to sustained global demand for AI-related chips, servers, data-center equipment and high-end electronic components. Benefiting from well-developed supply chains and improving technological capability, Chinese electronics manufacturers captured a favorable position amid this round of global growth in demand for computing power and smart devices, with both shipment volumes and average selling prices rising to varying degrees and lifting overall sector profitability. Industry observers also noted that as global cloud-computing and data-center capital spending continues to climb, order visibility for electronics manufacturers has improved as well, offering some support for the sector's momentum to continue into the second half of the year.

Beyond electronics, several resource- and materials-related industries also posted strong gains. Profits in non-ferrous metal smelting and rolling processing jumped 91.8 percent, chemical raw materials and products manufacturing rose 56.6 percent, and coal mining and washing increased 50.4 percent. Analysts said the improvement reflects both relatively firm commodity prices and sustained demand from downstream manufacturers — particularly the electronics and information technology sector — pointing to a relatively healthy interplay across the industrial supply chain that lifted profitability across resource-based industries as well.

More broadly, profits at high-tech manufacturing enterprises above designated size rose 50.1 percent in the first seven months, contributing 9.6 percentage points to overall industrial profit growth and cementing its role as one of the key engines of the expansion. Meanwhile, the profit margin on revenue across major industrial enterprises stood at 5.66 percent for the period, up 0.54 percentage points year on year and the highest level for the same seven-month stretch since 2023. Taken together, the figures suggest that against a backdrop of steady revenue growth and relatively contained cost increases, corporate profitability and operating efficiency are improving steadily, lifting the overall quality and efficiency of China's industrial economy.

The accelerating adoption of artificial intelligence is widely seen as one of the key variables behind the improvement in manufacturing profitability this year. As of mid-2026, the AI application rate among China's large-scale ("above-designated-size") manufacturing enterprises had exceeded 30 percent, meaning more than three in ten manufacturers covered by the statistics had adopted AI technology in some form — spanning production scheduling optimization, product quality inspection, predictive equipment maintenance and coordinated supply-chain management. Companies deploying such tools have generally reported clear gains in production efficiency and reductions in operating costs, with these changes gradually feeding through into stronger profits. In more concrete terms, some manufacturers have installed intelligent quality-inspection systems and predictive equipment-failure models on their shop floors, while a number of leading firms have experimented with building digital-twin production lines that use virtual simulation to spot production bottlenecks in advance, further cutting down on trial-and-error costs and wasted resources.

Systematic policy support has also underpinned the deep integration of AI with manufacturing. In January 2026, China's Ministry of Industry and Information Technology, together with seven other government departments, jointly issued the "AI+ Manufacturing" Special Action Implementation Opinion, which set out goals to deploy 1,000 high-level industrial AI agents, build 100 high-quality datasets and promote 500 typical application scenarios by 2028. The initiative is regarded as a major piece of top-level design for China's push toward intelligent manufacturing, intended to accelerate the deep integration of AI technology with manufacturing across production, product development and supply-chain management through systematic planning, providing a technological foundation and a standardized implementation path for industrial upgrading.

Across the wider industrial economy, AI adoption has expanded even more rapidly. Figures show China's overall industrial-enterprise AI application rate jumped from 9.6 percent in 2024 to 47.5 percent in 2025, while adoption of AI agents specifically rose from 1.7 percent to 35 percent over the same period. It should be noted that these broader figures are measured on a different basis from the manufacturing-specific "over 30 percent" adoption rate cited above, but together the two data sets reinforce one another, underscoring how quickly AI technology is spreading across China's industrial system and how wide its reach has become — an important window into the country's industrial transformation.

Taken as a whole, the resilience shown by high-tech manufacturing stands out against a backdrop of a complex external environment and continued growth pressure in some traditional industries, with its profit growth consistently outpacing the industrial average and emerging as a new driver of China's economic expansion. As the "AI+ Manufacturing" campaign advances and more typical application scenarios are rolled out, the integration of AI with manufacturing is expected to keep supporting improvements in corporate profitability in the period ahead. Some industry observers cautioned, however, that the rapid profit growth in certain sectors also reflects a relatively low comparison base from the same period last year and fluctuations in commodity prices, meaning the sustainability of the trend will need to be assessed against further monthly data. Market participants said they would keep a close watch on industrial profit figures and the manufacturing Purchasing Managers' Index for August and the third quarter, to gauge whether this round of profitability improvement, driven by high-tech manufacturing and AI adoption, can extend into a longer-term trend.