China defies war risks with 5% growth beat, but March data flashes warning

China’s economy grew 5.0% in the first quarter of 2026 compared to a year earlier, according to official data released by the National Bureau of Statistics on Thursday.

 This performance surpassed the 4.8% growth projected by analysts in a Reuters poll and marked an acceleration from the 4.5% expansion recorded in the fourth quarter. On a quarterly basis, gross domestic product grew 1.3% in the January-March period, slightly ahead of the 1.2% gain seen in the previous three months,  News.Az reports, citing Reuters.

Despite the stronger than expected headline figure, the world’s second-largest economy faces mounting risks as the Iran war jags up global energy prices and threatens to weigh on international demand.

Data for March showed signs of momentum fraying, with industrial output rising 5.7% year-on-year, down from 6.3% in the January-February period. Retail sales growth also slowed to 1.7% in March from 2.8% earlier in the year, missing forecasts of 2.3% as domestic consumption remains weak.

China’s export sector, which grew 14.7% over the full quarter, showed a sharp deceleration in March with growth of just 2.5% as the Middle East conflict increased transportation and energy costs. Economists anticipate that the economy will cool over the remainder of 2026, with full-year growth expected to settle at 4.6%. Beijing has maintained an official growth target of 4.5% to 5.0% for the year and has pledged to increase fiscal spending on infrastructure and public services to counteract external shocks.

News.Az 

By Leyla Şirinova