Employees work on the production line of solar panels at a workshop of Jiangsu DMEGC New Energy Co., Ltd. on July 22, 2025 in Suqian, Jiangsu Province of China.
Vcg | Visual China Group | Getty Images
Profits at China’s industrial firms grew at their fastest pace in six months in March, even as the Middle East war upended global oil markets and sent raw material costs soaring.
Industrial profits jumped 15.8% from a year earlier in March, the sharpest growth since September last year, National Bureau of Statistics data showed Monday, accelerating from the 15.2% surge in the first two months of this year.
In the first three months this year, enterprise profits expanded 15.5%, the fastest start to any year since 2017, barring the pandemic-driven spike in 2021.
Yu Weining, chief statistician at NBS, said the accelerated overall profit growth was largely driven by the equipment and high-tech manufacturing sectors, which saw profits soar 21% and 47.4% in the first quarter, respectively.
The artificial intelligence and semiconductor boom drove outsized profit growth across several subsectors in the first three months of the year. Profits for optical fiber makers surged 336.8% from a year earlier, while manufacturers for optoelectronics and display devices posted gains of 43% and 36.3%, respectively.
Demand for intelligent products also lifted earnings across emerging industries. Profits at drone manufacturers jumped 53.8%, while other intelligent consumer device makers gained 67.3%.
A slew of strategic emerging industries, such as aerospace, new energy, and next-generation information technology, drove a 116.7% surge in profits at non-ferrous metal firms, according to NBS data.
Earnings for raw material producers also rose 77.9% in the first quarter from a year earlier, as oil refineries swung to a profit.
The upswing follows a period of stabilization in 2025 when industrial companies’ earnings eked out a modest 0.6% growth after contracting for three straight years.
The soaring profits came even as rising global oil prices started seeping into the domestic economy, weighing on margins for manufacturers dependent on imported raw materials.
Brent crude oil prices have soared about 48% since the U.S.-Israel strikes on Iran began at the end of February, driving up costs for chemicals, fibers and plastics across the global supply chain.
The oil shock comes as enterprises’ profits were already under strain, with domestic demand remaining tepid amid a prolonged property market downturn and a gloomy job market that has fueled price wars across sectors.
A global rally in metal prices and Beijing’s effort to rein in excess production capacity and curb cutthroat competition have contributed to an easing of deflationary pressure.
China’s producer price growth turned positive in March, driven by higher oil prices, marking the first expansion in more than three years and ending the longest deflationary streak in decades.
Large onshore inventories of Iranian oil and crude on tankers at sea have provided some cushion for the world’s biggest importer.
The Trump administration said on Friday it had imposed sanctions on an independent “teapot” refinery in China for buying billions of dollars’ worth of Iranian oil, potentially harming a key energy source that accounts for a quarter of Chinese refinery capacity.
www.cnbc.com
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