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China Economic Growth
China's economy accelerated in the first quarter of this year, expanding 5% from a year earlier as it largely shrugged off impacts from the Iran war so far, according to data released Thursday. The January-March data released by the government, covering a period during which the Iran war began, was better than what economists expected and was up from the 4.5% growth seen in the October-December quarter. Economists expect China to be able to weather short term impacts from the Iran war, now in its seventh week. The war is pushing energy prices higher, worsening inflation and impacting global economic growth. But longer term, areas including global demand for Chinese exports could take a hit. The International Monetary Fund this week lowered its economic growth forecast for China to a 4.4% expansion for 2026. Chinese leaders last month set an economic growth target of 4.5 per cent to 5% for this year, the slowest since 1991.
China's exports grew 2.5 per cent in March from a year ago, significantly slowing from the previous two months as uncertainties rose from the Iran war and its impact on energy prices and global demand. The March export data released by China's customs agency Tuesday missed analysts' estimates and was sharply down from the 21.8 per cent export growth recorded for January and February. Imports last month surged 27.8 per cent, up from the 19.8 per cent year-on-year increase in the first two months of this year. Technology-related exports including a jump in shipments of semiconductors from China on the global artificial intelligence boom have powered its robust exports in early 2026, but economists say impacts from the prolonged Iran war could affect overall global demand for Chinese exports this year.
China's domestic passenger car sales fell 34.2% in February from a year earlier, an industry association said Wednesday, reflecting weakening demand as some trade-in subsidies are phased out. Only 950,000 units of passenger cars were sold in China last month, according to the China Association of Automobile Manufacturers, down from nearly 1.4 million vehicles sold in January. Overall passenger car sales including exports dropped 15.4% year-on-year, even as shipments overseas jumped 58% to 586,000, highlighting the challenges for Chinese carmakers trying to offset sluggish domestic sales by expanding into foreign markets. Automakers have been struggling with weak demand as the government has been phasing out trade-in subsidies to encourage purchases of electric vehicles. Chinese consumers have also been steering clear of big purchases, feeling a pinch from a slowing economy and protracted property slump. The Lunar New Year festival, China's biggest holiday, took place in February, .
China's exports rose nearly 22% in the first two months of the year from a year earlier, as its trade with countries other than the United States expanded. The export figures released by China's customs agency on Tuesday were much better than economists had forecast. They far exceeded the 6.6% annual pace of growth recorded in December. Imports in January and February rose almost 20%, up from December's 5.7% year-on-year increase. However, China's imports from the United States dropped nearly 27% from a year earlier. China's exports have been a bright spot for its economy despite tensions with the US. China's exports climbed 5.5% for 2025 as its trade surplus surged to a record of nearly $1.2 trillion. Higher shipments to other regions including Europe and Latin America helped offset a 20% drop in exports to the US as US President Donald Trump imposed a variety of higher tariffs on imports from much of the world. China's global trade surplus in January-February was $213.6 billion.
Two major economic plans unveiled at the annual meeting of China's legislature outline top priorities that have different ramifications for the global economy. In the government plan for 2026, the No. 1 task is "building a robust domestic market". Then comes accelerating technological progress. But longer-term, a plan for the next five years, gives more prominence to achieving advances in tech. The subtle difference highlights the government's balancing act. Its overarching goal is to transform from a low-cost manufacturing to a tech-driven economy. But a more immediate concern is dealing with a prolonged period of sluggishness that has depressed consumer and business confidence. China is such a large exporter that the choices it makes affect countries and jobs around the world. The plans, presented at the recent opening of the National People's Congress, offer a window into the government's thinking. They are set to be formally endorsed by the rubber-stamp legislature at the end o