China industrial profits surge 15% to start year, but oil price shock threatens outlook

Chinese industrial firms saw their profits surge in the first two months of this year as officials pressed ahead with efforts to contain the fallout from industrial overcapacity and lackluster consumer demand. Industrial profits jumped 15.2% from a year earlier in the January-February period, National Bureau of Statistics data showed Friday, extending a sharp rebound from a 5.3% jump in December. NBS chief statistician Yu Weining attributed the notable uptick to accelerated factory activity and rising product prices in the first two months this year. The high-tech manufacturing sector led the profit gains, Yu highlighted, with industrial profits suring 58.7% from a year earlier, driven by robust earnings growth in companies making unmanned aerial vehicles and semiconductors. Raw material producers, including non-ferrous metals and chemical producers, also reported strong profit growth, with profits rising 148.2% and 35.9%, respectively.Without directly addressing the Middle East conflict, Yu warned that spillover risks from "escalating geopolitical tensions" may weigh on China's growth outlook, while recovery across sectors remained uneven. For the entire year of 2025, China's industrial profits rose 0.6% from a year ago, snapping three consecutive years of declines as officials reined in aggressive price competition and companies doubled down on exports to tap overseas demand. Beijing has sought to contain the fallout from the disruption to oil shipments in the Middle East, triggered by the U.S.-Israeli attacks on Iran. Tehran has since closed the Strait of Hormuz, a critical waterway for energy flows, to most commercial vessels, upending the global energy markets. As rising global oil prices began seeping into the domestic economy, China raised the ceiling prices for retail gasoline and diesel earlier this week but limited the increase to about half the usual adjustment to cushion the impact on consumers.But surging energy prices are expected to impact the world's second-largest economy less than most other countries, due to its massive oil reserves and alternative energy sources. Iran has also continued to send millions of barrels of crude oil to China since the war began. Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2026 Versant Media, LLC.

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