China’s gross domestic product expanded in the first quarter of 2026, rising at its fastest pace since the second quarter of 2025. China’s government lowered its target for economic growth this year compared to last. While better-than-expected first-quarter growth was an encouraging sign, the outlook is uncertain amid the conflict in the Middle East, which has pushed up energy prices and is weighing on global economic activity. Earlier this week, the International Monetary Fund projected that China’s economy would grow by 4.4% this year. Here’s more on China’s economy during the first quarter.

• China’s economy expanded by 5.0% year-over-year in the first quarter of 2026. This was up from the 4.5% rate of growth in the fourth quarter of 2025 and puts it on track to top the Chinese government’s target for 2026.
• China’s economy got a boost from strong exports. Industrial output was relatively strong, which also contributed to growth. These factors outweighed the continuing weakness in consumer spending and the property market.
• The government has plans to increase its stimulus measures this year to help support growth. Meanwhile, the People’s Bank of China continues to keep its policy interest rates accommodative. Robust first-quarter growth has markets believing that stimulus measures might be targeted, tackling weak areas of the economy.
• External factors weigh on the outlook. The conflict in the Middle East has pushed up energy costs and could weigh on China’s exports in the months ahead.

China’s economy got off to a relatively strong start in 2026, but optimism slowly faded as tensions in the Middle East heightened. The world’s second-largest economy could see a negative impact on its exports and manufacturing sector as the conflict in the Middle East lingers and energy prices are pushed higher. The Chinese government may be left with no choice but to provide more stimulus to support economic growth.

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