China's first-quarter GDP grew 5.0 percent year on year, beating the Reuters consensus of 4.8 and accelerating from the fourth quarter's 4.5. [1] Underneath the headline is a different number: March exports rose 2.5 percent, a six-month low and a sharp slowdown from the 21.8 percent combined January–February surge. [2] The quarter the market has priced as resilience is a quarter whose second half looked nothing like its first.

The structural disclosure is the import surge. March imports jumped 27.8 percent year on year — the strongest growth since November 2021, and well ahead of the 11.2 percent expected — which is a function of higher energy prices feeding through the customs line faster than the exports that usually outpace them. [3] The trade surplus for March narrowed to $51.13 billion from the previous month's $90.98 billion. On the yuan side, exports actually declined 0.7 percent while imports rose 23.8 percent. The trade-surplus engine that has carried the post-property-slump economy for three years was running against itself.

The Iran war is the cause. The Middle East conflict pulled two things at once: global demand, which cooled the export column, and commodity prices, which lifted the import column. "China's exports have decelerated as the Iran war starts to affect global demand and supply chains," Natixis's Gary Ng told the AP, the most direct statement a PRC-facing chief economist made on the March print. [4] For a country whose net exports are roughly a third of GDP and which accounted for a record $1.2 trillion surplus in 2025, the second-quarter math begins from a weaker export baseline without the Lunar New Year front-loading to mask it.

Inside the Chinese statistical apparatus the factory-gate PPI registered its first year-on-year rise in three years in March — an artifact of the same commodity imports pushing through industrial input costs rather than a demand story. [5] Retail sales growth missed at 1.7 percent against 2.3 expected, and fixed-asset investment slowed. The pattern is the one a Beijing ministry would not write into the quarterly readout but which the aggregated numbers make visible: production and input costs up, household and investment demand flat, exports running down.

Beijing has been silent on the Strait of Hormuz reopening since the Friday closure. China imports roughly 90 percent of its crude through the strait but holds only 6.6 percent of consumption in traded volume — the reserve cushion that is carrying the Q1 print is not a Q2 cushion. With the ceasefire expiring Wednesday and the US Navy's Sunday seizure of the MV Touska, the export column's softening in March is the first column, not the last. The full-year target of 4.5 to 5.0 percent was set before the war began on February 28. It is measured now.

-- DAVID CHEN, Beijing