Link Securities | According to data from the National Bureau of Statistics (NBS), China’s Gross Domestic Product (GDP) grew by 5.0% year-on-year in Q1 2026, accelerating from the 4.5% growth recorded in Q4 2025 and exceeding analysts’ forecasts of 4.8% growth. This figure represents the largest year-on-year increase in the last three quarters as the Chinese government braces for the potential impact of the war in Iran. So far, the Chinese economy has been able to absorb the impact with limited disruption, supported by its vast oil reserves, a diversified energy mix and government controls that help contain price volatility.
However, the underlying trend appears mixed in March, as industrial production rose more than expected, but the increase in retail sales fell short of estimates, and the unemployment rate stood at its highest level in 13 months. In the trade balance, exports slowed sharply during the month, whilst imports rebounded.
Meanwhile, fixed asset investment in Q1 2026 continued to grow, albeit at a slower pace. Despite the strong start, economists expect China’s growth trend to moderate for the rest of the year, weighed down by headwinds from abroad, particularly a potentially protracted crisis in the Middle East.
