China’s Q1 economic rebound faces rough seas as Iran war jolts global outlook
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China's economy grew 5% in Q1 2026, beating forecasts, but the Iran war has raised energy costs and put global demand at risk. The export-led growth model is vulnerable to disruptions in sea lanes and soaring oil prices.
China's economy grew 5% year-on-year in Q1 2026, meeting the top of its target range. The growth was driven by an export surge, but the Iran war has raised concerns about global demand and energy costs. China's export-led growth model relies on open sea lanes, making it vulnerable to disruptions. Soaring oil prices threaten to drive up production costs and squeeze factory margins. Exports grew just 2.5% in March, slowing sharply from 21.8% in January-February. Analysts warn that 'bad inflation' driven by input costs could harm growth. China's economy remains imbalanced, with consumers unlikely to pick up the slack if exports falter. Retail sales grew 1.7% in March, underperforming industrial output.
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