China's economy grows 5% in Q1, surpassing expectations

China's economy grows 5% in Q1, surpassing expectations

China's economy expanded by 5% year-on-year in the first quarter of 2026, beating expectations amid the ongoing US-Israel war with Iran.

The National Bureau of Statistics (NBS) reported this growth rate for January-March, beating a forecast of 4.8%.

Amid a long-standing property sector crisis and weak domestic consumption, China is targeting an overall economic growth rate of 4.5-5% this year—the lowest in decades.

Retail sales grow by 1.7% year-on-year in March

The NBS data also showed that retail sales grew by 1.7% year-on-year in March, missing a Bloomberg forecast of 2.4%.

Meanwhile, industrial production rose by 5.7%, beating the Bloomberg forecast of 5.3% but slowing from January-February's combined growth rate of 6.3%.

These figures come as global energy prices rise due to the US-Israeli war on Iran, which has disrupted shipping through the vital Strait of Hormuz where one-fifth of world oil and gas passes through.

Potential global downturn could impact Chinese exports

Experts believe that China's diversified energy supply can buffer it from immediate shocks. However, a potential global downturn triggered by the US-Iran war could impact demand for its exports.

The International Monetary Fund recently revised its economic growth forecast for China to a 4.4% expansion for 2026.