China’s Q1 Recovery Faces Growing Risks as Iran War Clouds Global Outlook

China’s Q1 Recovery Faces Growing Risks as Iran War Clouds Global Outlook

CHINA: China’s economy expanded 5.0% year-on-year in the Q1 of 2026, beating forecasts and placing growth at the top end of Beijing’s full-year target range. Strong exports drove the early-year momentum, but the Iran war has raised concerns over higher energy costs, supply chain disruptions, and weaker global demand.

The conflict is already pushing up input prices for manufacturers. Peng Xin, general manager of Guangdong Rongsu New Materials, said nylon prices had surged sharply: "The current coping method is to negotiate the price for every single order. If you accept my price, we cooperate. Otherwise, there's nothing we can do." He added, "The entire industry chain is under pressure."

While China remains relatively resilient due to discounted Russian energy imports, strong coal use, and renewables, weak domestic consumption and continued property market weakness could increase pressure on Beijing to expand fiscal support if exports slow further.

Source: Reuters