(March 27): China’s industrial enterprises saw their profits rise sharply in the first two months of 2026, before the war in Middle East rocked the global oil market and sent raw material costs soaring.
Profits jumped 15.2% from a year ago, according to data released on Friday by the National Bureau of Statistics. Bloomberg Economics had expected a gain of 10.6% in January-February.
Industrial companies’ earnings stabilised in 2025, eking out a modest increase of 0.6% after contracting for three straight years.
A collapsing property market has kept domestic demand under pressure at a time when companies are also mired in price wars. But a global rally in metals and a government campaign to curb excessive competition have contributed to an easing of deflationary pressure.
That picture is shifting, however, after crude oil prices jumped about 50% since the US-Israel strikes on Iran began at the end of February. As a result, the cost of raw materials needed for chemicals, fibers and plastics are spiking, squeezing the profits of factories but likely benefitting upstream firms producing energy.
Producer-price growth will likely turn positive in March thanks to higher oil prices, following more than three years of contraction. That will end China’s record streak of economy-wide deflation.
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Still, profitability remains under pressure. The average profit margin of industrial companies in China fell for four consecutive years to 5.3% at the end of 2025, the lowest level in data dating back to 2014.
Uploaded by Liza Shireen Koshy
