China’s Economy Accelerates Amid Iran Conflict Turmoil

China reported a 5.0% year-on-year expansion in first-quarter GDP. The National Bureau of Statistics said the result beat the average Reuters forecast of 4.8%.

Growth snapshot

The pace accelerated from 4.5% in the fourth quarter. Beijing called the start of the year a “solid start,” while warning of rising risks.

China’s economy accelerates partly because exports stayed strong over the quarter. The country was the first major economy to release Q1 figures after the late-February outbreak of conflict in the Middle East.

Export performance and composition

Exports jumped 21.8% year-on-year in January and February. March saw a sharp slowdown to 2.5% as shipments and logistics were disrupted.

For the quarter, exports rose 14.7%, up from 5.5% a year earlier. Higher-value manufacturing and green technologies powered much of the gain.

• Electric vehicle exports rose 78% year-on-year.
• Lithium battery shipments increased 50%.
• Wind turbine goods grew 45%.

Vulnerabilities and external pressures

The Iran conflict has added turmoil to global energy markets. The National Bureau of Statistics warned that external conditions were becoming more complex and volatile.

China faces persistent domestic strains. A real estate slump since 2021 has weighed on household spending.

Industrial overcapacity has intensified price competition. Policymakers also grapple with weak demand despite strong supply.

Energy and trade considerations

China holds sizable oil and gas stockpiles and diverse supply sources. That provides some insulation from immediate shocks.

Yet heavy reliance on exports leaves the economy exposed. Last year’s trade surplus hit a record-breaking 1.2 trillion.

Analysts and outlook

Capital Economics economist Zichun Huang said the economy is holding up. He warned, however, that China is becoming more dependent on external demand.

Some analysts argued the March export dip reflected Chinese New Year timing. The IMF issued a downbeat global outlook and warned of an oil shortfall this year.

Short-term momentum looks solid. But geopolitical instability and domestic imbalances could reshape the path ahead for Beijing.