Chinese industrial companies posted higher profits in the first two months of the year despite the threat of the Middle East conflict undermining further growth in the coming months.
The profits of China's industrial enterprises in January and February jumped 15.2% year on year to 1.024 trillion yuan, according to the National Bureau of Statistics on Friday.
The current figures are the fastest growth since 2018, Bloomberg News reported.
NBS statistician Yu Weining said more than 60% of industries rebounded during the period.
The profit of the manufacturing industry saw a 18.9% jump, while that of the mining industry rose 9.9% and utilities grew 3.7%, the NBS said.
Amid the popularity of the artificial intelligence sector, the profits of the computer manufacturing industry rose twofold from a year earlier, the NBS said, especially as China's AI-driven trade continues to bolster. In a March 24 note, ANZ economists Vicky Xiao Zhou and Raymond Yeung forecasted that trading within the AI industry will remain robust despite the current energy disruption. Semiconductor exports surged 163.9%, with South Korea's exports to China jumping 69%.
A number of tech companies have fared better in 2025 as demand for AI grows. Cambricon Technologies (SHA:688256), which specializes in AI accelerator chips, swung to an attributable profit of 2.06 billion yuan from a net loss of 452 million yuan a year earlier. MetaX Integrated Circuits' (Shanghai) (SHA:688802) and Moore Threads Intelligent Technology's (SHA:688795) both saw their attributable losses narrow down year on year.
Meanwhile, profits of the non-ferrous metal industry grew 1.5-fold, the NBS said.
The chemical manufacturing sector's profits jumped 35.9%, while the non-metallic mineral industry's and textile industry's profits grew 16.2% and 12.6%, respectively.
However, the oil and gas extraction industry's profits dropped 16.8%, and those of the automobile manufacturing industry fell 30.2% from the previous year. The ongoing military attacks in Iran could further bring material impact on the domestic oil supply, especially since the Strait of Hormuz has not yet been fully opened.
In another note from the ANZ, Senior China Strategist Zhaopeng Xing said China can contain the risk of the oil crisis, unless it persists in the long term, affecting its economic growth.
"We maintain China's GDP forecasts at 4.8% for 2026 and 4.6% for 2027," Xing said. "If the oil shock persists and the scale of oil deficit rises, China's GDP growth will decline by as much as 10% in 2027. We will wait for more activities in the next few months to assess the growth impact."
"Overall, the profits of industrial enterprises above a designated size have grown rapidly," Yu said. "However, it must be recognized that the international environment is volatile, external risks, particularly the spillover risks from geopolitical conflicts, are rising, and there are many unstable and uncertain factors."
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