China’s economic growth rebounded more than expected in the first quarter of 2026, suggesting limited immediate spillovers from the Iran war while giving policymakers more room to delay additional stimulus. Gross domestic product (GDP) in the world’s second-largest economy expanded 5.0% year-on-year in January-March, the fastest pace in three quarters, according to data released by the National Bureau of Statistics (NBS) on Thursday, reported Bloomberg.The reading was higher than the 4.8% median forecast of economists and above the 4.5% growth recorded in the previous quarter, pointing to resilience despite global disruptions.China’s economy “achieved a strong start to the year, further demonstrating its resilience and vitality”, the NBS said in a statement.The data came even as a surge in global energy prices– triggered by the US-Israel war on Iran–disrupted shipping through the Strait of Hormuz, a critical route through which about a fifth of the world’s oil and natural gas passes.Analysts said China’s diversified energy supply has helped shield it from immediate shocks, though a prolonged conflict could weaken global demand and hit exports, which have been supporting growth.The International Monetary Fund recently cut its 2026 growth forecast for China to 4.4% from 4.5%, warning the global economy could be “thrown off course” by the Middle East conflict.“The global economy is facing this next test of resilience as signs of unevenness lie beneath the surface,” the IMF said, noting that China’s domestic activity– especially in the housing sector–continues to lag behind exports.Beijing has set a growth target of 4.5-5.0% for 2026, the lowest in decades, amid a prolonged property sector crisis and weak domestic consumption.Outbound shipments have remained strong, reflected in a $1.2 trillion trade surplus last year, but recent data showed export growth slowed sharply in March, signalling early impact from the war.Retail sales rose 1.7% year-on-year in March, falling short of expectations of 2.4%, while industrial production grew 5.7%, beating estimates but moderating from earlier months.The first-quarter growth momentum was largely driven by exports, Zichun Huang of Capital Economics told news agency AFP.“We think growth will soften a bit over the rest of the year,” she said, adding that China is becoming increasingly dependent on external demand, a trend likely to be reinforced by the Iran war.At the Canton Fair in Guangzhou, Chinese exporters and Middle Eastern buyers told AFP that the conflict has already dented orders and pushed up prices.Wang Jun, deputy head of China’s customs administration, acknowledged rising risks, citing “many uncertainties and instabilities in the external environment”.“The impact of international geopolitical conflicts on global industrial and supply chains is still evolving in a complex manner,” he said.While the latest data underscores near-term resilience, economists warned that escalating geopolitical tensions and weakening global demand could weigh on China’s growth trajectory in the months ahead.
