China’s economy recorded a stronger-than-expected performance in the first quarter of 2026, with GDP growing 5 percent year-on-year at constant prices, marking a solid start to the 15th Five-Year Plan period (2026–2030). The growth rate reached the upper end of the country’s annual target range of 4.5 to 5 percent and ranked among the highest for major global economies despite a complex external environment.
Several key indicators contributed to this better-than-expected outcome.
Investment rebounded after a period of decline, with fixed-asset investment rising 1.7 percent year-on-year in the first quarter. This turnaround followed earlier contractions and reflects policy efforts to stabilize and boost investment, including advancing major national projects and supporting manufacturing upgrades. Infrastructure investment grew by 8.9 percent, while manufacturing investment increased by 4.1 percent.
Service consumption also showed stronger momentum, with service retail sales rising 5.5 percent year-on-year. Growth was driven by supportive consumption policies and expanding sectors such as tourism and cultural services, alongside increased activity during holiday periods.
Corporate profitability improved notably. In the first two months of 2026, profits of major industrial enterprises rose 15.2 percent compared to the previous year, with strong gains in equipment and high-tech manufacturing sectors. This reflects improving efficiency and increased production across industries.
Foreign trade posted significant growth, with total imports and exports surpassing 11 trillion yuan ($1.61 trillion) in the first quarter—marking a record for the period and a 15 percent year-on-year increase. Exports alone rose 11.9 percent, supported by recovering global demand, a strong domestic industrial base, and growing innovation among Chinese firms.
Market sentiment also strengthened. In March, the manufacturing purchasing managers’ index (PMI) rose to 50.4, returning to expansion territory after two months, while service sector activity also improved, signaling growing confidence in the economic outlook.
Overall, the performance reflects China’s continued focus on high-quality development, balancing steady growth with innovation and structural improvements. Despite ongoing global uncertainties, the economy has demonstrated resilience, with policymakers aiming to further consolidate this positive momentum in the months ahead.
