China’s State-owned industrial enterprises, which account for the majority of China’s SOEs, ended two years of losses in 2016 and reaped good returns on the back of structural optimization.

In 2016, the profits of State-owned industrial enterprises rose 6.7 percent, the highest growth rate since 2012, according to the State-owned Assets Supervision and Administration Commission.

Profits are no longer limited to traditional industries including oil and coal, with more sectors reporting increasing profits and restored growth, such as pharmaceuticals, electrical machinery and equipment.

“SOEs are making steady progress benefiting from the supply-side structural reform,” said Shen Ying, chief accountant of the SASAC.

“Resources are flowing into the more competitive enterprises, helping revitalize their stock and optimizing the efficiency of resource allocation.”

SOEs under central government control reported 1.9 trillion yuan ($276 billion) in revenue in January, an 8.7 percent year-on-year increase. The total profit reached 89.12 billion yuan, 24.5 percent higher than the same period last year.

Compared with the past, when SOE’s profits were limited to a few sectors including oil, power and coal, the profits are more balanced and well distributed, with profits from electronic equipment, electrical machinery, medicine and wine, beverages and refined tea reaching 165.6 billion yuan ($241.1 billion), accounting for 14.1 percent of the total, up 2.5 percent year-on-year.

SOEs in coal, power, oil exploration and processing accounted for 35.3 percent of the total profits, an 8.3 percent decrease year-on-year, as well as the fourth consecutive year of decrease.

On the other hand, manufacturing has become the major profit source, which earned 839.3 billion yuan in 2016, a year-on-year increase of 36.2 percent, the fourth consecutive year of growth since 2013, with advanced manufacturing sectors including electronic equipment, electrical and mechanical, pharmaceutical having substantially improved in the past three years.

In addition to SOEs under the central government, locally administered SOEs also reported growing profit, the government said.

In 2016, the SASAC promoted the reorganization and integration of 10 State-owned enterprises, including Baosteel and Wuhan Iron and Steel Co, and the number of enterprises supervised by SASAC has also been reduced to 102.

China COSCO Shipping Corporation Ltd said it has achieved a profit growth of nearly 8 percent year-on-year with operating costs dropping significantly, greatly increasing the competitiveness in the global shipping market.

Analyst said the SOE’s ending profit losses and restructured profit shares are due to China’s constant upgrading of the economic structure and innovation, keeping economic growth at a reasonable range and raising growth quality and efficiency.