China Records 5% Growth in Q1 Despite Global Uncertainty

China’s Gross Domestic Product (GDP) grew by 5% year-on-year in the first quarter of 2026, reaching 33.4 trillion yuan (approximately $4.87 trillion), according to PTI reports citing official data. The growth rate was 0.5% points higher than in the previous quarter. 

The figures show the start of the 15th 5-Year Plan period, set to begin this year, with an emphasis on tackling underlying economic issues. 

Output Picks Up Across Sectors 

Industrial production recorded faster growth compared with the final quarter of 2025. The services sector continued to expand, while agricultural output remained stable. 

On the demand side, retail sales growth improved by 0.7% points from the previous quarter. Fixed-asset investment increased by 1.7%, returning to positive territory. Trade in goods posted its fastest quarterly expansion in 5 years. 

Employment conditions remained broadly stable, and prices rose moderately during the period. 

Property Investment Declines Further 

The real estate sector remained a drag on growth. Property investment fell by 11.2% in the first quarter, compared with an 11.1% decline recorded in the first 2 months of the year. 

The continued contraction shows weakness in the housing market, which has affected investment activity and household demand. 

External Risks and Growth Target 

China has set its 2026 growth target in the range of 4.5 to 5%, a reduction from previous years. The adjustment reflects external uncertainties, including tariff tensions and the broader economic impact of the Iran conflict. 

The International Monetary Fund has revised China’s growth forecast for 2026 to 4.4%, citing weaker global demand and geopolitical risks. 

Limited Impact from Energy Volatility 

Despite rising global energy prices, domestic impact has remained contained. Oil accounts for less than 20% of China’s total energy consumption. 

Price increases in related sectors have been lower than those observed internationally, limiting the effect on overall inflation. 

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Conclusion 

The first-quarter data indicates steady growth supported by industrial activity and trade. At the same time, continued weakness in property and external uncertainties remain key factors for the months ahead. 

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