Economic forecasters anticipate China’s financial performance will demonstrate renewed strength during the opening months of the year, driven primarily by robust international trade activity, according to a comprehensive survey of 50 economists conducted by Reuters.
The world’s second-largest economy is projected to achieve 4.8% growth compared to the same period last year, representing an uptick from the disappointing 4.5% recorded in the final quarter of the previous year – marking the weakest performance in three years.
However, analysts warn that this positive trajectory may not sustain itself throughout 2026. Economic expansion is anticipated to decelerate to 4.7% during the second quarter, ultimately resulting in annual growth of 4.6% for the full year, down from 5.0% in the previous year. This forecast aligns closely with Beijing’s official target range of 4.5% to 5.0%.
While China has managed to weather the initial economic impact from the Iranian conflict with relatively minor disruptions – thanks to substantial petroleum reserves, varied energy sources, and strict price regulation – economists caution that sustained elevated oil costs are already increasing production expenses and reducing company profits during a period when domestic consumer spending remains sluggish.
The nation’s export sector, which serves as a crucial economic foundation, faces potential challenges if the regional conflict continues and weakens the global marketplace, experts note.
“Higher oil prices would hit China’s economy through terms of trade shock and downstream margin squeeze,” analysts at Morgan Stanley said in a note.
“But unlike many other net oil importing countries, which face production disruptions owing to energy shortage and constrained policy space amid elevated inflation, China is better positioned.”
Warning signs are beginning to emerge within the Chinese economy. Manufacturing prices increased in March for the first time in over three years, indicating that energy-related cost pressures are infiltrating the economy and potentially threatening already narrow profit margins for businesses.
Upcoming economic data scheduled for release Tuesday is expected to reveal that China’s export growth weakened in March as international buyers pursuing artificial intelligence-driven opportunities face the harsh realities of Middle Eastern warfare.
When measured quarterly, economic growth is forecast at 1.3% for the January through March period, slightly higher than the 1.2% recorded in the previous quarter.
Chinese officials will publish first-quarter economic data alongside March activity statistics on April 16 at 0200 GMT.
Beijing has established a budget deficit target of approximately 4% of gross domestic product for 2026 and prepared substantial bond offerings to bolster economic growth. Meanwhile, the central bank has committed to maintaining supportive monetary policy despite having restricted ability to reduce interest rates as inflation begins to rise.
“With the 2026 growth target set at 4.5–5%, a strong first-quarter print should give policymakers room to hold off major stimulus at the late-April Politburo meeting despite Middle East-related energy risks,” analysts at Societe Generale said in a note.
The Politburo, representing the Communist Party’s primary decision-making authority, is scheduled to convene later this month to evaluate economic prospects.
Government leaders have recognized a significant disparity between robust production capacity and insufficient consumer demand, promising to substantially increase household spending’s portion of the overall economy during the next five years, though specific numerical goals have not been established.
Financial analysts surveyed by Reuters anticipate the central bank will maintain the primary one-year lending rate at current levels through the end of 2026, while reducing banks’ reserve requirements by 20 basis points during the third quarter.
Consumer price inflation is projected to accelerate to 1.0% in 2026 from zero growth in 2025, before stabilizing in 2027, according to the survey results.
