China Maintains Early-Year Growth Pace Amid Rising External Pressures

China’s economy expanded by around 5 percent in the first quarter of 2026, according to figures released by the National Bureau of Statistics of China, placing growth slightly above market expectations and keeping the country broadly on track with its annual target.

The performance marks a steady start to the year for the world’s second-largest economy, supported by industrial activity and policy measures aimed at sustaining momentum. On a quarterly basis, output also increased compared with the final months of last year, indicating continued, if moderate, expansion.

Despite the positive headline figure, recent trade data suggests that conditions may be becoming less supportive. Export growth slowed in March following a strong beginning to the year, pointing to weaker demand in overseas markets and a more uncertain global environment.

Economists warn that geopolitical developments could begin to weigh more heavily on the outlook. China’s reliance on imported energy makes it sensitive to disruptions in global supply routes and price volatility. Rising fuel costs, linked to tensions in the Middle East, are expected to feed through into production and transport expenses.

“However, a protracted war and longer-term higher energy prices would probably start to have a negative impact on economic growth,” said Lynn Song of ING.

Concerns are also emerging around the potential knock-on effects for global demand. Slower growth in major economies could reduce appetite for Chinese goods, adding pressure to an export sector that remains a key pillar of activity.

“If the war with Iran is not resolved quickly, it is likely to damage the growth of the world economy, which will have a negative impact on the ability to absorb Chinese exports,” said Eswar Prasad of Cornell University.

The International Monetary Fund has recently lowered its forecast for China’s growth this year to around 4.4 percent, reflecting a combination of external risks and ongoing domestic challenges, including weak property investment and cautious consumer spending.

While the first quarter data indicates resilience, the trajectory for the remainder of the year will depend on how these pressures evolve and whether domestic support measures can offset a more fragile global backdrop.

Source: CIJ.World Research & Analysis Team