China’s economy grew at a faster-than-expected pace of 5.0% in the first quarter, a sign that the government’s policy support measures are gaining traction and setting a solid foundation for achieving its annual growth target. The year-on-year expansion accelerated from 4.5% in the fourth quarter of last year, the National Bureau of Statistics (NBS) said Tuesday.
"The national economy made a good start to the first quarter, laying a positive foundation for achieving the year's development goals," the NBS said in a statement. The data provides early evidence that the world's second-largest economy may be finding its footing after a prolonged property slump and weak consumer confidence.
On a quarter-on-quarter basis, GDP expanded by 1.3% in the first three months of 2026. By industry, the tertiary sector, or services, led the recovery with a 5.2% year-on-year increase. The secondary, industrial sector grew by 4.9%, while the primary sector expanded by 3.8%. Total GDP for the quarter reached 33.4 trillion yuan.
The robust data may provide a tailwind for Chinese assets. In the wake of the announcement, the offshore yuan (CNH) held its ground, while ETFs tracking Chinese stocks such as the iShares China Large-Cap ETF (FXI) and the iShares MSCI China ETF (MCHI) are expected to see renewed interest. The data also suggests resilient demand from China, which could support prices for commodities like copper and iron ore. The last time China posted a similarly strong first-quarter growth figure was in 2023, which was followed by a rally in both the CSI 300 index and the yuan over the subsequent two months.
Looking ahead, policymakers are expected to continue their supportive stance to ensure the recovery momentum is sustained. The People's Bank of China has kept the one-year medium-term lending facility (MLF) rate unchanged, signaling a cautious approach to monetary easing. Investors will be closely watching the upcoming Politburo meeting in April for further policy signals, particularly regarding fiscal stimulus and support for the property sector.
This article is for informational purposes only and does not constitute investment advice.
