Global Oil Supply Disruptions Bring Unexpected Benefits to China
Global oil price surges due to Middle East conflicts have brought an unexpected impact on China’s economy. Amid rising energy costs, the industrial sector of the Bamboo Curtain nation recorded double-digit profit surges supported by strong exports and a technology boom.
Data from China’s National Bureau of Statistics shows that industrial companies’ profits jumped 15.8% year-on-year in March 2026. This figure marks the fastest growth in the last six months and is higher than the 15.2% increase in the first two months of the year.
Cumulatively, profits of Chinese companies in the first quarter of 2026 grew 15.5%. This growth represents the best start to the year since 2017, excluding the surge during the 2021 Covid-19 pandemic.
Quoting CNBC International, NBS Chief Statistician Yu Weining highlighted high-tech manufacturing and equipment sectors as the main drivers of growth. Profits in these sectors surged 21% and 47.4% respectively in the first quarter.
The AI and semiconductor boom also drove performance surges across various sub-sectors. Optical fibre producers recorded profit jumps of up to 336.8%, while the optoelectronics and display device industries grew 43% and 36.3% respectively.
Demand for smart technology-based products also lifted profits in emerging industries, such as drone manufacturers, which surged 53.8%. The raw materials sector was also boosted, with profit increases reaching 77.9% as oil refineries returned to profitability.
Morgan Stanley economist Robin Xing assesses that China’s energy structure, reliant on coal and renewables, provides important cushioning amid global oil price spikes.
“China is in a relatively better position and has the potential to capture export market share amid a significant but not extreme energy shock,” said Xing.
A similar view was expressed by Pinpoint Asset Management President and Chief Economist Zhiwei Zhang, who considers strong exports as one of the main factors driving industrial performance. However, he warns that pressures have not fully eased.
“The Middle East conflict will continue to burden the economy in the second quarter, as higher energy prices and weakening global demand pose challenges for exporters,” said Zhang.