China economic growth accelerates to 5% in first quarter, beating expectations
People walk in front of a shopping mall during the week-long National Day holiday in Beijing on October 7, 2025.
Greg Baker | Afp | Getty Images
China’s economy regained strength in the first quarter as strong export growth offset sluggish domestic demand; However, the energy shock triggered by the Iran war clouds the growth outlook and threatens global demand.
Data released by the Office for National Statistics on Thursday showed gross domestic product grew 5% in the three months to March, accelerating from 4.5% in the previous quarter and beating economists’ forecast for 4.8% growth in a Reuters poll.
Beijing had lowered its growth target for this year to between 4.5% and 5%; This was the least ambitious target on record dating back to the early 1990s, with an implicit recognition of a slowdown in demand and ongoing trade tensions with the United States.
“We must be aware that the external environment is becoming more complex and variable,” the statistics bureau said in a statement, warning of an “acute” imbalance between “strong supply and weak demand.” he said.
Separately, urban fixed asset investment, including real estate and infrastructure investments, rose 1.7% in the first quarter from a year earlier, missing expectations for growth of 1.9% in a Reuters poll. Investments in the real estate sector fell by 11.2%.
In March, China’s retail sales rose 1.7% year-on-year; It slowed from the 2.8% increase boosted by the holiday in February and was below economists’ forecast for 2.3% growth.
Industrial production increased 5.7% last month compared to a year ago; This was above analysts’ expectations for a 5.5% increase, compared to a 6.3% increase in February.
The urban survey-based unemployment rate rose to 5.4% in March from 5.3% in February.
As the world’s largest oil importer and a heavily export-dependent economy, China is already vulnerable to an oil shock that will slow trade, raise factory costs and darken the outlook for the rest of the year.
According to the Economist Intelligence Unit, China’s exports increased by 14.7% in the first quarter compared to the previous year in US dollar terms; This was the fastest increase since the beginning of 2022.
However, the country’s export growth slowed to 2.5% in March, a sharp decline from 21.8% in the January-February period, as the Iran war suppressed global demand and increased energy and logistics costs.
Ex-factory prices in China rose in March for the first time in more than three years; This signaled that the rise in energy costs was beginning to infiltrate the manufacturing sector and threaten already thin company margins.
— CNBC’s Evelyn Cheng contributed to this report.
