China’s industrial sector kicked off 2026 with robust profit growth, posting a 15.2% rise in January-February compared to the same period last year, data from the National Bureau of Statistics showed on March 27.
Reuters reported that this builds on last year’s modest 0.6% gain, signalling early signs of economic recovery in the world’s second-largest economy.
Tech-related industries led the charge, with computer, communication and electronic equipment manufacturers’ profits soaring 200%, while non-ferrous metal smelting and rolling grew 150%.
Strong exports fuelled by artificial intelligence technology demand, higher industrial output and rebounding retail and investment activity contributed to the momentum.
However, margins remain under pressure as rising input costs, intense competition and geopolitical tensions, including the US-Israeli strikes on Iran, pose risks to exports, a key engine of growth.
Consumer inflation ticked up during the Lunar New Year, while producer deflation persists, signalling ongoing weak domestic demand.
Rising costs of components, particularly memory chips, threaten profitability, with Xiaomi president Lu Weibing warning some firms could face “big losses or even go bust” if cost pressures persist. Analysts caution that the Middle East crisis could weigh further on global trade and energy markets in the months ahead.
