Beijing, Apr 16 (PTI) China's economy grew by five per cent in the first quarter of this year, exceeding expectations despite the global fallout from the US-Israel war.

The first three months of GDP generated 33.4 trillion yuan (about USD 4.87 trillion), accelerating by 0.5 percentage points from the fourth quarter of 2025, data from China's National Bureau of Statistics (NBS) showed on Thursday.

The result marks a strong opening to China's 15th Five-Year Plan period, which begins from this year, the NBS said.

The plan aims to reshape China's economy, which has been struggling with several issues, including weak consumption, a shrinking population and a prolonged property crisis.

Property investment, a heavy drag on economic growth last year, fell 11.2 per cent in the first three months of the year, worsening slightly after a fall of 11.1 per cent was reported in January and February.

In the first quarter, "the growth of production and supply accelerated, market demand continued to improve, employment was generally stable, market prices picked up moderately, and high-quality development advanced with new and positive momentum," the NBS said, explaining the reasons for the faster growth rate.

Last month, China, for the first time in recent years, lowered its GDP target to 4.5 to 5 per cent for this year in the face of US President Donald Trump's trade tariff war, the worsening global crisis following the US-Iran war and headwinds in the domestic economy, owing to the property market slump and unemployment crisis.

This week, the International Monetary Fund lowered China's 2026 growth forecast to 4.4 per cent from 4.5 per cent in January as it downgraded global projections, citing weak demand and fallout from the Iran war.

China has been setting a five per cent target for the GDP for the last three years amid growing domestic economic challenges. This year, the target is lowered to 4.5 per cent to five for the first time.

China's economy grew by five per cent last year to USD 20.01 trillion, riding high on the robust exports despite US tariffs, while domestic consumption, its bugbear, remained sluggish.

"The national economy got off to a good start with the development showing greater resilience and vitality," the NBS said on the Q1 results.

“GDP came in stronger than expected, marking a very solid start to the year, and Beijing is unlikely to take immediate policy action,” said Ding Shuang, the chief economist for Greater China and North Asia at Standard Chartered.

While external uncertainties are rising, and could weigh more heavily on the second quarter, policymakers are likely to emphasise flexibility and retain policy space rather than act immediately, Ding told the Hong Kong-based South China Morning Post.

Mao Shengyong, deputy head of the NBS, said the data reflect a marked improvement across both supply and demand.

On the supply side, agricultural production remained favourable, while industrial output grew at a faster pace compared with the fourth quarter last year, with sustained rapid growth in the service sector, he told the media.

On the demand side, the growth rate of retail sales of consumer goods quickened by 0.7 percentage points compared to the last three months of 2025. Fixed-asset investment swung back to growth, rising 1.7 per cent, and foreign trade in goods registered the fastest quarterly growth rate in five years.

Over the 14th Five-Year Plan period (2021-2025), China saw its economy grow at an average annual rate of 5.4 per cent, well above the global average, and accounted for around 30 per cent of global growth, he said.

"However, we should be aware that the external environment is becoming more complex and volatile, the imbalance between strong supply and weak demand is still acute, and the foundation for economic growth is yet to be consolidated," Mao said.

While ongoing geopolitical conflicts have sent international energy prices soaring, triggering fuel shortages and disrupting production and life in many nations, China has remained largely unaffected by these shocks, Mao said.

He attributed this stability to China's sustained efforts to diversify its energy mix.

Mao acknowledged the impact of energy disruptions, but at the same time, the impact is less as oil accounts for less than 20 per cent of China’s total energy consumption.

“While international energy prices have had some impact, price increases in related sectors within China have been significantly lower than those in international markets,” he said. PTI KJV ZH ZH