China's factory profits jump 14.4% on AI chips and copper, while retail sales crawl at 1.1%

Profits at China's large industrial firms rose 14.4% in September from a year earlier, according to National Bureau of Statistics figures released Tuesday and reported by CNBC. That is the strongest pace since June. Over January to September, profits are up 15.5%. WSJ's headline said growth "surged" and Reuters described a two-speed economy; we could not open either article, and the Bureau's own release was not yet posted when we checked, so the figures here are as CNBC reported them.

Where the profit is coming from

The Bureau's chief statistician, Yu Weining, attributed most of the growth to electronics and advanced manufacturing. For the first nine months, as CNBC relayed them:

• Profits of electronic special materials makers more than tripled.
• Semiconductor equipment makers' profits rose 51.7%.
• Optical fiber makers' profits rose more than sixfold and cable makers' more than doubled, on data-center buildout.
• Copper and aluminum producers' profits rose nearly 45%, helped by AI-related and renewable demand.

Higher commodity prices from the war in Iran also helped miners and raw-material suppliers. Factory-gate prices rose at their fastest pace since mid-2022, so part of the profit growth is price, not volume.

The weak half

September retail sales grew only 1.1%, beating forecasts but barely above August. Profits in consumer-linked industries such as clothing, autos and furniture trail those in high tech. Downstream manufacturers face rising input costs without pricing power at home. Oxford Economics' Shena Yue said export strength cannot fully offset domestic weakness, with the property downturn still weighing on durables.

Third-quarter GDP grew 4.5% from a year earlier and 4.6% over nine months, inside the government's 4.5% to 5% target. That is one reason analysts quoted by CNBC see no urgency for Beijing to add stimulus.

Who this reaches

For a U.S. importer of consumer goods, the split matters: the profit boom is at chip, cable and metal suppliers, while makers of furniture and apparel are squeezed by costs, so the strength is in intermediate goods, not in what Chinese households buy. For data-center builders sourcing fiber, cable and aluminum, the profit surge at those suppliers is worth watching in quotes. Chinese shares have not shared in the cheer: the ASHR China A-shares ETF closed Monday at $30.94, about 17% below its June high.

Sources: CNBC (reporting China National Bureau of Statistics data); WSJ and Reuters headlines; Yahoo Finance price data. This is market information, not investment advice.