China Economy Expands 1.3% QoQ in Q1

China’s GDP grew 1.3% qoq in Q1 2026, matching market expectations and following a 1.2% increase in Q4. The latest result marked the strongest quarterly expansion since Q4 of 2024, supported by continued policy backing from Beijing. However, the statistics agency warned of an “acute” imbalance between “strong supply and weak demand,” adding that the external environment is becoming increasingly complex and volatile. The government has set a budget deficit target of around 4% of GDP for this year and plans sizable bond issuance to help sustain growth. Meanwhile, the central bank has signaled it will maintain an accommodative monetary stance, although the scope for aggressive rate cuts remains constrained by rising inflation. Economists currently expect a 20bp cut in banks’ reserve requirement ratio in Q3 to support liquidity. The Politburo is expected to convene later this month to review the economic outlook and policy direction.

China’s GDP grew 1.2% quarter-on-quarter in Q4 2025, beating market expectations of 1.0% and following a 1.1% increase in Q3, logging the fastest expansion in three quarters. The latest reading reflected sustained policy support from Beijing alongside efforts to curb excess industrial capacity and rein in aggressive price competition. Leaders in December pledged to maintain a proactive fiscal stance for this year, with the statistics bureau calling for stronger macro policies and expanded domestic demand. Authorities also vowed to strongly lift household consumption’s share of the economy over the next five years. On the monetary front, the PBoC continued to keep liquidity ample, guiding borrowing costs lower, and providing cross-cyclical support without resorting to excessive stimulus. Recent measures included sector-specific lending rate cuts, signals of possible reserve-requirement and broader rate reductions, and steps to stabilize capital markets against mounting headwinds.

China’s GDP grew 1.1% quarter-on-quarter in Q3 2025, beating market expectations of 0.8% and following a marginally revised 1.0% gain in Q2. The stronger-than-expected performance reflects Beijing’s policy support, including liquidity injections to stabilize credit markets and curb deflationary pressures amid weak demand. The central bank also signaled plans to cut rates “at an appropriate time” to boost lending and investment further. However, renewed U.S.-China trade tensions underscore vulnerabilities in China’s export-driven economy, with President Trump threatening tariffs of up to 100% on Chinese goods from November 1, though both sides have expressed willingness to ease disputes. China’s statistics agency noted that external uncertainties, weak domestic demand, and operational strains among firms continue to challenge economic stability. A spokesperson said the Chinese economy is like “a vast ocean, not a small pond, capable of withstanding storms and even tempests.”