Amid escalating tensions in the Middle East, the global economy has entered a new phase of uncertainty. In the latest World Economic Outlook released on April 14, the International Monetary Fund (IMF) lowered its projection for global economic growth to 3.1 percent in 2026, down from 3.3 percent in its January projection. It warned that the risk of a longer or broader conflict and worsening geopolitical fragmentation will push up inflation and debt levels, posing a downward risk on the global economy.
While the IMF noted that the slowdown in growth and rise in inflation are likely to be more pronounced in emerging markets and developing economies, advanced economies also face mounting challenges. With public debt in many major economies exceeding 100 percent of GDP and inflation still above target rates, policymakers confront increasingly difficult trade-offs, leaving limited room for large-scale fiscal stimulus or prolonged subsidies to cushion external shocks.
Against this increasingly complex global backdrop, China’s economy has demonstrated strong resilience and strategic stability. In the first quarter, the economy grew by 5.0 percent. This performance reflects not only short-term policy support, but also the deeper structural strengths of the Chinese economy. The IMF’s forecast for China is 4.4 percent growth in 2026, well above the 3.1 percent for the world and 3.9 percent for emerging markets and developing economies. It is 0.1 percent lower than the January projection, but 0.2 percent higher than the projection in October 2025.
A key pillar of this resilience is China’s low inflation. While many major economies continue to grapple with price pressures, China has kept inflation relatively contained, preserving policy flexibility to implement counter-cyclical measures, including targeted monetary easing and expansionary fiscal policies to support growth.
The low inflation is largely based on China’s energy structure which provides an important buffer against the disruption in global energy supply. While many economies remain highly dependent on imported oil and gas, China’s diversified energy mix, anchored by coal and rapidly expanding renewable capacity, helps stabilize industrial costs. As global energy prices rise, this comparative cost advantage could further turn into competitiveness of China’s manufacturing sector.
This advantage is already reflected in the country’s trade performance. In the first quarter of 2026, China’s total foreign trade expanded by 15 percent, with exports rising by 11.9 percent and imports increasing by 19.6 percent.
Against the backdrop of the Middle East conflict and the resulting global energy shock, demand for renewable technologies is accelerating, creating new growth opportunities for China’s exports of photovoltaics, energy storage systems and new-energy vehicles.
At the same time, the strong growth in imports plays a stabilizing role for the global economy, helping to absorb external supply pressures and support commodity demand. Looking ahead, the key for China is to further leverage its structural advantages. By making full use of its low-inflation environment and ample policy space, China can continue to expand domestic demand, promote technological innovation and accelerate the construction of a unified national market. Strengthening the domestic economic dynamics while maintaining high-level opening-up will be essential to sustaining long-term growth.
With solid fundamentals, flexible policy tools and continuous structural transformation, China is well positioned not only to withstand external shocks, but also to provide greater stability and certainty for the global economy.
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