China's industrial profits are growing more slowly despite AI boom in the technology industry

While China's tech industry profits have soared thanks to the AI ​​boom, other industries are struggling with overcapacity and declining pricing power.

A training facility for humanoid robots: The AI ​​boom has been able to drive profits in the technology industry. Photo: Xu Yu/Xinhua/dpa

Beijing. Chinese industrial profit growth slowed further in August due to continued weak domestic demand. Industrial companies' profits rose 4.2 percent compared to the same month last year, according to data from the National Statistics Bureau (NBS) on Monday.

In July the increase was 11.2 percent. In the first eight months of the year, profits rose 15.7 percent, following a 17.6 percent increase in the January-July period. The statistics cover companies with annual sales of at least 20 million yuan ($2.98 million) from their main business.

While the boom in artificial intelligence (AI) drove profits in the technology industry, companies in other sectors are increasingly struggling to maintain their pricing power due to purchasing reluctance and excess capacity.

Profits in the manufacture of computers, communications and other electronic devices jumped 110 percent in the first eight months. In contrast, the wine, beverage and tea industry recorded a 34.7 percent drop in profits.

To compensate for weak domestic demand, many factories are relying on exports. However, given geopolitical tensions and growing international criticism of China's trade surplus, this risks further deepening the country's dependence on exports.

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