China’s economy grew an annualized 5% in this year’s first quarter as it shrugged off impacts from the Iran war and geopolitical disruptions.
The January-March data released by the government in Beijing was better than what economists expected and was up from the 4.5% growth seen in the final quarter of 2025.
On a quarter-over-quarter basis, China’s economy grew 1.3% in the first three months of this year from the final quarter of last year.
Economists had expected China, the world’s second largest economy, to be able to weather short-term impacts from the Iran war, which is now in its seventh week.
The war is pushing energy prices higher, worsening inflation, and impacting global trade. But, so far, there has been limited impact on China’s economy.
The International Monetary Fund this week trimmed its economic growth estimates for China to a 4.4% expansion for all of this year as it lowered global growth forecasts over Iran war shocks.
Chinese leaders last month set an economic growth target of 4.5% to 5% for all of 2026, the slowest pace of economic expansion since 1991.
The latest government data showed that industrial output in China rose 5.7% in March year-over-year, better than markets expectated.
Retail sales were up 1.7% from a year earlier, worse-than-estimates and reflecting sluggish domestic demand for consumer goods.
A years-long real estate sector slump in China has dragged on its economy. However, China’s trade surplus rose to a record $1.2 trillion U.S. despite President Donald Trump’s tariffs.
China’s exports will continue to be key in propelling its economy this year. The country recently reported that its exports grew 2.5% in March from a year ago, slowing from the previous two months.
