(Yicai) July 27 -- China's industrial profits rose sharply in the first six months, soaring 18.7 percent from a year earlier, primarily driven by the electronics and information technology, non-ferrous metals and chemicals sectors. Profit margins also reached their highest cumulative year-to-date reading reported since the start of 2024.

Profit growth at industrial enterprises above a designated size, which refers to those with an annual revenue of at least CNY20 million (USD2.9 million), accelerated by 3.2 percentage points in the first half compared with the first quarter, according to data released by the National Bureau of Statistics today. In June alone, industrial profits surged 15.1 percent year on year, although the pace slowed by 6 percentage points from May.

Supported by steady growth in industrial production and a continued recovery in producer prices, the revenue of large industrial enterprises jumped 6.5 percent in the six months ended June 30 from a year earlier, an acceleration of 1.5 percentage points from the first quarter. The operating profit margin for these enterprises widened 0.59 percentage point to 5.7 percent.

In the first half, the strong profit growth reflected the effective implementation of more proactive macroeconomic policies, said Yu Weining, chief statistician at the NBS' industrial department. By developing new quality productive forces tailored to local conditions, industrial production showed steady progress, new growth drivers accelerated in growth, and the profits of industrial enterprises above a designated size achieved rapid growth.

Industrial profits have maintained robust growth while overall profits quality improved with lower costs and higher profit margins supporting profitability, Pang Ming, a member of the China Chief Economist Forum, told Yicai. The industrial economy continues to gain momentum, with the strongest performance coming from the electronic information, non-ferrous metals and chemicals industries. However, traditional sectors such as automobiles and ferrous metals remain under significant pressure, highlighting an ongoing structural shift from old to new growth drivers.

Industrial profit growth will continue to depend on factors such as international commodity prices, the recovery in external demand and domestic policy support, Pang said. High-tech manufacturing and resource-based industries are expected to maintain strong growth, while traditional sectors such as automobiles and ferrous metals are likely to remain under pressure.

On the policy front, efforts should continue to focus on reducing business costs, improving efficiency, expanding domestic demand and supporting the development of new quality productive forces to sustain the recovery in corporate profitability, he added. Overall, he expects industrial profits in the second half to continue showing "overall improvement alongside widening sector divergence." Industrial upgrading and cost optimization will remain key priorities.

Industrial profits are still on a recovery path, although the focus will increasingly shift toward the transition from traditional to new growth drivers and greater divergence across industries, said Wen Bin, chief economist at China Minsheng Bank. Continued price recovery, improving profit margins and sustained prosperity in sectors such as electronics, semiconductors, automation equipment and upstream materials are expected to support corporate earnings. Overall, it is highly likely that the current pattern of new growth drivers outperforming old ones and midstream and upstream sectors outperforming downstream ones will continue, he added.

Editor: Kim Taylor