China’s industrial sector sustained double-digit profit growth through the first seven months of 2024, driven in large part by expanding use of artificial intelligence (AI) and ongoing industrial upgrades, according to data released by the National Bureau of Statistics (NBS) on Thursday. However, growth in July slowed for the third consecutive month, reflecting uneven sector performance and underscoring the need for stronger domestic demand to support the transition toward new growth engines.

From January to July, profits at major industrial enterprises in China reached 4.58 trillion yuan ($682 billion), marking a 17.6 percent increase compared with the same period last year. While this growth remains robust, it represents a slight moderation from the 18.7 percent rise reported in the first half of the year.

The electronics industry emerged as a key driver of profit expansion, with earnings surging 110 percent year-on-year and contributing 9.3 percentage points to the overall industrial profit growth. Within this sector, the integrated circuit segment—including computing and memory chips—reported an 18.5-fold increase in profits, reflecting explosive growth.

Yu Weining, chief statistician at the NBS department responsible for industrial statistics, credited the sharp rise to the accelerated application of AI technologies coupled with a sustained increase in demand for computing power. This dynamic has bolstered market appetite and pushed up prices for related products.

In addition to the electronics sector, other high-tech manufacturers also saw strong gains, with profits climbing 50.1 percent during the period. Nonferrous metal producers recorded a 91.8 percent increase in profits, a development analysts partly link to the AI-driven demand for critical mineral resources, which has helped keep prices elevated.

Despite these gains, analysts caution that the moderation in profit growth and ongoing disparities across different industrial sectors point to the need for policies that encourage more domestic consumption and investment. Such measures are deemed essential to ensure a smooth shift from traditional growth drivers to emerging industries supported by technological innovation.