LAHORE (Dunya News) – China’s economy expanded by 5% year-on-year in the first quarter of 2026, showing resilience despite the early impact of the ongoing Iran war, according to official data.
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Figures released for the January–March period exceeded expectations and marked an improvement from the 4.5% growth recorded in the previous quarter. On a quarterly basis, the economy grew 1.3%, its fastest pace in a year.
Analysts say China, the world’s second-largest economy, has so far managed to absorb short-term shocks from the conflict, even as rising energy prices continue to fuel inflation and weigh on global growth prospects.
However, concerns remain over longer-term risks, particularly the potential decline in global demand for Chinese exports if the conflict persists. The International Monetary Fund has already lowered China’s 2026 growth forecast to 4.4%, citing wider economic uncertainty linked to the war.
Industrial output rose 5.7% in March compared to a year earlier, supported by strong global demand for electronics, vehicles, semiconductors and robotics. In contrast, retail sales increased by just 1.7%, reflecting weak domestic consumption.
China’s economy continues to face challenges from a prolonged downturn in the property sector, which has dampened consumer and investor confidence. Despite this, strong exports helped the country achieve around 5% growth last year.
Economists warn that while exports remain a key driver, over-reliance on external demand could pose risks, especially if global markets weaken due to prolonged geopolitical tensions.
Experts suggest that policy support and increased public investment could help China meet its annual growth target of 4.5% to 5%, though structural issues such as low consumer demand and deflationary pressures may persist.
