China’s Industrial Sector Profits Reach Highest Level in Over Six Months Despite Iran Conflict

China’s leading industrial companies reported profits in March at their highest level in over six months. The improvement in factory-gate prices, after prolonged pressure caused by disruptions related to the Iran conflict, further strengthened this growth. According to data released Monday by the National Bureau of Statistics (NBS), the total profits of large industrial enterprises with annual revenues exceeding 20 million yuan increased by 15.8 percent last month, marking the fastest growth rate since September. In the first quarter of this year, total profits reached 1.696 trillion yuan, an increase of 15.5 percent compared to the same period last year. By contrast, the profit growth rate in the first quarter of last year was limited to just 0.8 percent.

The Producer Price Index, which measures the prices of goods leaving factories, showed improvement in March for the first time in three years. Following the global commodity price increases triggered by the conflict between the US, Israel, and Iran, the prices of goods produced by Chinese factories have also risen. Regionally, quarterly profits in the manufacturing sector grew by 19.1 percent, while the mining sector saw a 16.2 percent increase. Notably, rapid advancements in artificial intelligence and semiconductor industries led to dramatic rises in specialty sectors: optical fiber production surged by 336.8 percent, and display device manufacturing increased by 36.3 percent. Additionally, profits in computer and communication equipment manufacturing rose by 120 percent. Analysts note that the pace of profit growth outstripped revenue growth, indicating enhanced operational efficiency or benefits gained through cost adjustments. Zhang Zhiwei, chief economist at Pinpoint Asset Management in Hong Kong, cautioned that rising energy prices combined with weak foreign demand could create pressure on China’s exports in the coming months.