China’s industrial sector posted a strong start to the year, with profits rising sharply, but growing global energy risks are casting uncertainty over the outlook. Data released by the National Bureau of Statistics of China showed industrial profits increased by 15.2% year-on-year in the January–February period, extending a rebound from a 5.3% rise recorded in December.
According to chief statistician Yu Weining, the surge was driven by stronger factory activity and rising product prices, signaling improving momentum across key manufacturing sectors.
High-tech manufacturing emerged as a major growth driver, with profits jumping 58.7% amid robust performance in industries such as semiconductors and unmanned aerial vehicles. Raw material sectors also recorded significant gains, with non-ferrous metals and chemical producers seeing profits rise sharply.
Despite the upbeat data, officials cautioned that risks remain. Ongoing geopolitical tensions—particularly disruptions in global energy markets—pose potential challenges to sustained growth.
The closure of the Strait of Hormuz, a critical route for global oil shipments, has intensified volatility in energy markets. Rising oil prices have already begun filtering into domestic costs, prompting authorities to adjust fuel price caps while attempting to shield consumers from sharp increases.
China’s policymakers have been working to balance industrial growth with persistent challenges such as overcapacity and weak consumer demand. While profits for 2025 rose modestly by 0.6%, it marked a recovery after three consecutive years of decline.
Analysts note that China may be relatively insulated from global energy shocks compared to other economies, supported by large oil reserves and diversified energy sources. Continued crude imports from Iran have also helped ease supply concerns.
However, the trajectory of industrial profits will likely depend on how global energy markets evolve, with oil price volatility emerging as a key risk factor for the world’s second-largest economy.
