China’s Q1 GDP grows 5%, meeting new target range despite Iran war disruptions
China’s economy grew faster than expected in the first three months of the year, registering 5% year-on-year growth despite disruptions from the US-Israel war with Iran. Official data showed the expansion surpassed economists’ expectations of about 4.8%, even as the conflict that began on 28 February strained global energy supplies and hit Asian economies in particular.
The release is the first since Beijing cut its annual growth target last month to a range of 4.5%–5%, its lowest expansion goal since 1991. The rebound from a 4.5% increase in the previous quarter was driven by manufacturing, while falling property investment continued to weigh on the world’s second-largest economy.
Exports—especially cars and other manufactured goods—were a “major bright spot,” said Kyle Chan, an analyst from the Brookings Institution. Chan added that the full effects of the Iran war are yet to be seen and said next quarter’s GDP figure is likely to be weaker due to trade disruptions caused by the conflict.
China’s latest GDP target and economic objectives were announced in March under its latest Five Year Plan. Beijing also pledged to invest heavily in innovation, high‑tech industries and measures to boost domestic spending. The ruling Communist Party is seeking to reshape an economy facing weak consumption, a shrinking population and a prolonged property crisis.
From abroad, China faces an energy crunch linked to the Iran war and ongoing global trade tensions, including US President Donald Trump tariffs policies. China currently faces a 10% US tariff for most of its goods. On Tuesday, US Treasury Secretary Scott Bessent said the levies may be restored by the beginning of July to the levels in place before the Supreme Court struck down many of the import taxes.
Trump and Chinese President Xi Jinping are expected to meet in China in May. Trade data published Tuesday underscored slowing momentum. China’s export growth eased sharply to 2.5% in March from a year earlier, according to the General Administration of Customs, a six‑month low after combined exports for January and February jumped by more than 20% year on year on strong demand for electronics and manufactured goods.
China combines trade figures for the first two months to smooth fluctuations around the Lunar New Year. Imports surged by nearly 28% in March, customs data showed. With energy markets unsettled and trade routes disrupted, analysts cited in the data cautioned that the resilience seen in the first quarter may be tested in the months ahead.