China’s economy grew 5% in the first quarter of 2026, a rebound exceeding expectations. The expansion, reported for the January-March period, indicates limited initial impact from the war in Iran. Policymakers have more time to assess the situation before considering additional stimulus measures.
The growth was driven by resilient exports and early policy support. However, signs of weakness are emerging as the conflict disrupts global supply chains, impacting trade and increasing factory costs. Beijing had set a growth target of 4.5% to 5% for the year, its least ambitious goal in decades.
As a major energy importer and export-reliant nation, China remains vulnerable to potential oil shocks. While the initial impact of the Iran war has been largely shrugged off, other Asian countries have been significantly affected by the conflict.