Chinese firms trail global peers on profits, but AI power boom offers bright spot: Natixis

China's corporate sector lags behind global competitors, but the country stands to benefit from the global artificial intelligence boom. Natixis, a French bank, surveyed thousands of firms and found that Chinese firms' profit margins stabilized at about 4.5% in the first half of 2026, while their global peers recorded nearly 9%. Returns on capital for Chinese firms stood at around 6% during the same period, compared to over 11% globally, according to Natixis' latest China corporate monitor.

Chief economist Alicia Garcia Herrero highlighted the "duality of the Chinese economy," which extends beyond macroeconomic data and is deeply rooted in corporate governance. The disparities between state-owned enterprises (SOEs) and private firms are evident, with SOEs benefiting from favorable borrowing conditions due to lower interest burdens (2.2% versus 3.2% for private firms). However, private companies are more profitable.

Despite these challenges, Chinese firms continue to face difficulties in revenue generation and capital returns. Nonetheless, the debt burden of Chinese firms has significantly decreased, which is a positive sign. Natixis economist Haoxin Mu emphasized China's strength in the AI era, stating that the country's ample power capacity would enable it to easily power AI data centers.

Mu estimated that AI data centers would account for only about 5% of China's annual increment in power consumption, compared to much higher percentages in other major economies.

This means that nearly half of the additional energy needed to meet future demand growth in the US could be absorbed by AI data centers in China. The segment has become a key engine for China's export growth, with power equipment exports to AI data centers surging in recent years.