China’s factories had a strong May, but the story underneath the headline number is more interesting than the number itself. Industrial production grew 4.5% year-on-year, up from 4.1% in April and beating the consensus forecast of 4.3%. The boost came overwhelmingly from two sources: exports and artificial intelligence.
That’s a meaningful distinction. Broad-based domestic demand didn’t drive the acceleration. Instead, China’s manufacturing engine is increasingly running on foreign buyers and the global hunger for AI hardware.
The AI export machine
May’s export figures tell the real story. Overall exports surged 19.4% year-on-year. Automated data processing equipment exports jumped 66.1%. High-tech products climbed 50.9%.
Industrial profits have followed suit, rising 15.8% year-on-year in March, with first-quarter cumulative profit growth landing at 15.5%. The AI and semiconductor sectors were the primary drivers of that profitability surge.
