China's first quarter Gross Domestic Product (GDP) grew by 5.0% year-on-year, exceeding the consensus estimate of 4.8%, according to Standard Chartered economists Carol Liao, Shuang Ding, and Hunter Chan [1]. This stronger-than-expected growth was driven by robust exports, which expanded by 14.7% year-on-year, supported by China's ongoing competitiveness, tariff reductions, and strong demand for new-energy and AI-related goods [1]. Fixed asset investment (FAI) also rebounded sharply, rising 1.7% year-on-year in Q1 after a significant contraction of -12.8% in Q4-2025, as infrastructure and manufacturing investment benefited from front-loaded fiscal spending [1].
Retail sales showed signs of stabilisation, with growth accelerating on a quarter-on-quarter basis, though the housing market continued to struggle with deep contractions in investment, construction, and sales [1]. March data indicated some softening, attributed to Lunar New Year seasonality, base effects from 2025, and a possible early impact from the Middle East conflict. Retail sales growth slowed after the holidays, and export growth eased following strong performance in January and February, which was partly due to front-loaded shipments ahead of the Lunar New Year [1].
The Standard Chartered economists note that the end of Producer Price Index (PPI) deflation and stabilising domestic demand further support the positive outlook. They expect no near-term rate cuts, as the government is likely to maintain its current policy stance in light of the solid Q1 growth and a flexible growth target for the year [1]. At the upcoming Politburo meeting in late April, policymakers are expected to highlight risks from a prolonged Middle East conflict and the importance of reserving policy space, but are unlikely to introduce additional policy support in the near future [1].
CONCLUSION
China's stronger-than-expected Q1 GDP growth reduces the likelihood of imminent policy easing, as authorities are expected to maintain their current stance. While exports and fixed asset investment have rebounded, the housing market remains a concern, and policymakers are monitoring external risks.