Profits rose 15.8% from a year ago after jumping 15.2% in the first two months of 2026, according to data released on Monday by the National Bureau of Statistics.
For the first quarter, they climbed 15.5%, more than expected by Bloomberg Economics.
The improvement follows an increase in factory prices in March after three and half years of deflation. Lifted by higher oil and metal costs, which likely boosted earnings of upstream sectors such as mining.
Consumer-facing industries, on the other hand, were squeezed by higher raw material costs as they struggled to pass them on to their customers.
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Elevated oil prices will likely continue to support producer prices but may also act as a drag on factory output, leading industrial profits to slow in the coming months unless domestic demand turns around, Bloomberg Economics said in a report prior to the release.
China’s industrial sector has powered the economy’s growth since the pandemic, as exports soared. But intense competition and overcapacity meant that profits declined or stagnated for four straight years, before they surged in the first two months of 2026, led by electronics manufacturing and metals.
