China's economy grows faster than expected despite Iran war

China's economy grew faster than expected in the first three months of the year, even as countries around the world feel the impact of the US-Israel war with Iran.

Gross domestic product (GDP) rose by 5% in the period, compared to a year earlier, according to official data. Economists had expected the figure to come it at around 4.8%.

That came despite the conflict in the Middle East, which started on 28 February, severely disrupting global energy supplies, with Asian countries hit particularly hard.

It also marks the first release of official GDP figures since Beijing cut its annual economic growth target last month to a range of 4.5%-5%, its lowest expansion goal since 1991.

The rebound from a weaker expansion of 4.5% in the previous quarter was driven by manufacturing, while the world's second largest economy continues to be weighed down by falling property investment.

Cars and other exports were a "major bright spot" in the data, said Kyle Chan, an analyst from the Brookings Institution.

The Iran war's full effects are yet to be seen, Chan said, adding that next quarter's GDP figure is likely to be weaker due to trade disruptions caused by the conflict.

China's latest GDP target and economic objectives were announced in March under its latest Five Year Plan. Beijing also pledged to invest heavily in innovation, high-tech industries and efforts to boost domestic spending.

The ruling Communist Party is trying to reshape the country's economy, which has been struggling with a number of issues including weak consumption, a shrinking population and a prolonged property crisis.

From abroad, China also faces an energy crunch due to the Iran war and global trade tensions, including US President Donald Trump tariffs policies.

China currently faces a 10% US tariff for most of its goods. However, US Treasury Secretary Scott Bessent said on Tuesday that the levies may be restored by the beginning of July to the levels in place before the Supreme Court struck down many of the import taxes.

Trump and Chinese President Xi Jinping are expected to meet in China in May.

On Tuesday, China published monthly export numbers for March, which showed a sharp slowdown in growth as the conflict pushed up inflation and curbed consumer spending.

China's export growth slowed sharply to 2.5% last month compared to the same time last year, according to data released on Tuesday by the General Administration of Customs.

It marks a six-month low and comes after the combined exports for January and February jumped by more than 20% compared to a year before.

That figure was boosted by strong demand for electronics and manufactured goods.

China combines the trade data for the first two months of each year to account for fluctuations around the Lunar New Year holiday season, which falls on different dates each year.

China's imports also surged by nearly 28% in March, customs data showed.

That left China's monthly trade surplus - how much its exports exceed imports - at just over $50bn (£36.85bn), the lowest number in more than a year.

The surge in the value of imports is likely to be to due a rise in costs globally as a result of the Iran war, according to economics lecturer Yixiao Zhou from the Australian National University.

Iran's threats against vessels that try to use the crucial Strait of Hormuz shipping route has driven up the cost of crude oil, as well as materials made from it like plastics.

And when it comes to China's exports, consumers around the world are less willing to spend due to higher prices caused by the the conflict in the Middle East, Zhou added.

"Export growth ultimately depends on your trading partners' economies," she said. "It is hard to sustain that growth at a very high rate continuously."