New growth drivers, policy push raise industrial profits

China's push for innovation-led growth is adding fresh momentum to its industrial economy, with major enterprises sustaining double-digit growth in profits in the first three quarters of 2026, underpinned by rapid earnings expansion in the electronics sector and high-tech manufacturing, officials and experts said on Tuesday.

The increasing contribution of new growth drivers, coupled with recent policy support, is reinforcing confidence in the nation's full-year growth outlook, they said, emphasizing the need to expand domestic demand more proactively and accelerate technological upgrades in traditional industries in order to sustain momentum and smooth the way for economic transition.

Their remarks came as data released on Tuesday by the National Bureau of Statistics showed that profits at major industrial enterprises rose 15.5 percent year-on-year to 6.03 trillion yuan ($904 billion) in the first three quarters, a pace that remained robust despite easing slightly compared with the first eight months.

In September, profit growth rebounded to 14.4 percent — the fastest pace in three months, up from 4.2 percent in August and 11.2 percent in July — ending four consecutive months of moderation, the NBS said.

"New growth drivers played a prominent role," said Yu Weining, chief statistician at the bureau's industrial statistics department, citing a 52 percent year-on-year surge in high-tech manufacturing profits that lifted the sector's share of total industrial profits to 25.5 percent in the first three quarters, up 6.2 percentage points from a year earlier.

The electronics sector also provided a particularly strong boost, with profits doubling year-on-year and contributing 9.6 percentage points to overall industrial profit growth, NBS data showed.

As profits for manufacturers of specialized electronic materials soared 220 percent, Yu noted that a strong market appetite for AI computing power and advanced memory products helped fuel the growth.

Luo Zhiheng, chief economist at Yuekai Securities, said that artificial intelligence could "significantly boost productivity and corporate earnings in the longer term, as it drives a new wave of technological and industrial transformation".

This longer-term perspective echoes a report released recently by United States-based investment bank Morgan Stanley, which said that China is entering a new phase of industrial development, moving beyond its traditional advantages of low costs and manufacturing scale toward strengths rooted in industrial ecosystems and innovation.

"China is moving from being the world's factory toward becoming the world's industrial operating system — combining scale, automation, AI, supply-chain depth and global deployment," the report added.

The country's industrial upgrading is also opening up new growth opportunities for foreign technology providers.

Mathivanan Venkatachalam, global vice-president of IT management solutions provider ManageEngine, said its China business is growing at a double-digit pace.

"I am very optimistic about the Chinese economy," he said in an interview with China Daily, expressing confidence that government efforts to raise productivity and support economic growth would help enterprises grow faster.

Wen Bin, chief economist at China Minsheng Bank, said that stepped-up policy support for investment is expected to translate more quickly into stronger industrial demand, helping profit growth gradually stabilize in the fourth quarter.

The prospect of steadier industrial earnings comes amid more upbeat forecasts for the broader economy. Last week, Deutsche Bank raised its fourth-quarter GDP growth forecast for China by 0.1 percentage point to 4.7 percent, while maintaining its full-year projection at 4.6 percent.

Song Yu, chief China economist at UBS Securities, said he expects the country's fourth-quarter GDP growth to be not lower than that of the third quarter, while full-year growth is likely to reach 4.6 percent.

However, experts cautioned that the Chinese economy still faces insufficient effective demand and a pronounced divergence in profit growth across sectors, with some traditional manufacturing and downstream industries remaining under pressure.

NBS data showed that profits in the ferrous metal smelting and rolling industry plunged 73.3 percent year-on-year in the first three quarters, while those in nonmetallic mineral products manufacturing dropped 46.9 percent.

Luo, from Yuekai Securities, said more macroeconomic policy support remains necessary until new growth drivers can adequately offset weakness in traditional ones. "Keeping aggregate demand broadly stable will help to create a favorable macroeconomic environment for the transition," he said.

Wang Yubo contributed to this story.