China’s economy grew faster than expected in the first quarter of 2026, with official data showing 5.2% year-on-year GDP expansion despite ongoing challenges in the housing market. The stronger-than-anticipated performance was largely driven by a 12% increase in infrastructure spending, particularly on railway projects and urban transit systems.
Analysts note the government’s strategic pivot toward public works projects has helped counterbalance a 7.3% decline in residential property prices nationwide. “The infrastructure push is serving as both an economic stabilizer and long-term productivity enhancer,” said a senior economist at a Shanghai-based research institute who requested anonymity due to media restrictions.
Consumer spending growth slowed to 3.1% as households remained cautious amid the property downturn. However, manufacturing output rose 6.8%, supported by increased exports of electric vehicles and renewable energy equipment. Officials have signaled plans to maintain elevated infrastructure investment through at least 2027, with particular focus on transportation networks in less-developed western provinces.
Market observers warn the recovery remains uneven, with private sector investment growing just 2.4% compared to 15.6% for state-owned enterprises. Some analysts question whether the infrastructure-led model can sustain growth indefinitely without stronger domestic consumption.