China’s Industrial Profits Rise Amid Iran War and Energy Crisis
News Summary
Prepared by AI. Editorially reviewed.
- China’s major industrial companies saw profits rise 15.8% in March, marking the highest growth rate since last September.
- The Producer Price Index improved for the first time in three years, indicating an increase in production costs.
- Rapid growth in the artificial intelligence and semiconductor sectors drove a 120% surge in profits from computer and communication equipment manufacturing.
April 27, Kathmandu – Profits for China’s major industrial companies reached their highest point in six months during March. This growth was driven by an improvement in the long-suppressed factory-gate prices amid disruptions caused by the Iran war and the ongoing energy crisis.
According to data released Monday by the National Bureau of Statistics (NBS), the total profits of large industrial enterprises with an annual revenue exceeding 20 million yuan increased by 15.8% last month, marking the fastest growth rate since last September.
The total profit in the first quarter of this year hit 1.696 trillion yuan, up 15.5% compared to the same period last year. By contrast, profit growth in the first quarter of last year was only 0.8%.
The Producer Price Index (PPI), which measures the prices of goods leaving factories, showed improvement in March for the first time in three years. Global price increases in goods due to the conflict between the US, Israel, and Iran contributed to a rise in prices of products manufactured by Chinese factories.
Regionally, the manufacturing sector’s quarterly profit increased by 19.1%, while the mining sector saw a 16.2% improvement. Particularly, rapid development in the artificial intelligence and semiconductor industries lifted optical fiber production profits by 336.8% and display-device production by 36.3%. Similarly, the computer and communication equipment manufacturing sector recorded a 120% profit increase.
Analysts have indicated that the faster growth in company profits relative to revenue suggests enhanced operational efficiency or benefits gained from cost adjustments. Zhang Jiwei, chief economist at Pinpoint Asset Management in Hong Kong, cautioned that rising energy prices and weak foreign demand could exert pressure on China’s exports in the coming months.