World Growing Hotter, China's Profits Soar Wildly
Jakarta, CNBC Indonesia - Profits of Chinese industrial companies soared in March 2026, showing strong resilience amid global energy price turbulence due to Middle East conflicts. The latest data indicates a significant surge in earnings, driven by the boom in the artificial intelligence (AI) and semiconductor sectors.
The National Bureau of Statistics (NBS) recorded that industrial profits rose 15.8% year-on-year in March, marking the fastest growth in the past six months. This figure is higher than the 15.2% increase in the January-February period.
Cumulatively, industrial company profits in the first quarter of 2026 grew 15.5% year-on-year, becoming the strongest start to the year since 2017, excluding the anomalous surge during the 2021 pandemic.
“This growth is mainly supported by the equipment and high-tech manufacturing sectors,” said Yu Weining, chief statistician at the NBS, as quoted by CNBC International.
He detailed that profits in the equipment sector jumped 21%, while high-tech manufacturing rocketed 47.4% in the first quarter.
The AI and chip industry explosion became the main driver. Profits of optical fibre producers even surged up to 336.8% compared to the previous year. Meanwhile, optoelectronics and display device producers recorded profit increases of 43% and 36.3%, respectively.
Demand for smart products also boosted performance. Drone producers’ profits rose 53.8%, in line with increasing adoption of consumer devices based on smart technology.
Not only that, the upstream sector also recorded a recovery. Raw material producers’ profits jumped 77.9% in the first quarter, supported by the shift of oil refineries to profitable zones. Strategic industries such as aerospace, new energy, and next-generation information technology also contributed to major profit surges, including the non-ferrous metals sector which rose 116.7%.
Meanwhile, President and Chief Economist of Pinpoint Asset Management, Zhiwei Zhang, assessed that exports were one of the main supports for growth. He noted that in the first quarter, China’s exports grew 14.7% in US dollars, the fastest pace since early 2022. Assuming an exchange rate of Rp17,000 per US$, this increase equates to around Rp249.9 trillion for every additional US$14.7 billion.
“However, the Middle East conflict will continue to burden the economy in the second quarter, especially through rising energy prices and weakening global demand,” said Zhang.
Rising energy prices are indeed starting to be felt. Brent crude oil prices have surged around 48% since the conflict escalation at the end of February, pushing up raw material costs such as chemicals, fibres, and plastics across the global supply chain. Nevertheless, China’s energy structure, which relies more on coal and renewables, provides a buffer against such turbulence.
China’s chief economist at Morgan Stanley, Robin Xing, said that around 70% of companies in 32 industrial sectors reported smaller cost shocks and lighter production disruptions compared to global competitors.
“China is in a relatively better position and has the potential to capture export market share amid major but not extreme energy shocks,” he said.
Nevertheless, pressures have not fully eased. Slowing global demand could hold back export momentum, while high imported energy costs could continue to squeeze profit margins. Domestically, the weakening property market and sluggish labour market also burden demand, triggering price competition in various sectors.
However, there are improvement signals from the price side. China’s producer price index (PPI) returned to positive growth in March, driven by rising oil prices, ending the longest deflationary period in decades.
Morgan Stanley forecasts that producer inflation will rise 1.2% this year after falling 2.6% the previous year, while consumer inflation is projected to increase to 0.8% from last year’s stagnant conditions.