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[INTRO: AMINE LAOUEDJ, MANAGING DIRECTOR]
Welcome. Each week from London, we break down the key global economic event that shaped the past seven days, and we analyze what it means for business.
[LAST WEEK'S KEY ECONOMIC EVENT]
On Thursday, China dropped its economic growth figures for the first quarter of 2026. GDP grew 5 percent compared to last year. That beat the 4.8 percent economists were predicting, and it is a solid step up from the 4.5 percent we saw at the end of 2025.
But this was not just another quarterly update.
The war involving the US, Israel, and Iran broke out at the end of February. That means this first quarter covers two months of peace and one month of war. Up until now, all we had were forecasts. This is our first piece of hard data from any major economy covering the conflict. And because of China's sheer size, it gives us our first real look at what is actually happening on the ground.
Let's look under the hood of that 5 percent.
Exports grew 14.7 percent across the quarter. But that average is hiding a massive drop-off. In January and February, exports surged 22 percent compared to a year earlier. Then came March, the first month of the war, and export growth collapsed to just 2.5 percent.
What drove that slowdown? A combination of higher logistics costs from the conflict, some distortions from the Lunar New Year, and a massive 26 percent drop in exports to the US driven by tariffs.
Meanwhile, local retail sales grew a sluggish 2.4 percent, slowing down to just 1.7 percent in March.
Factory output, however, grew 6.1 percent and stayed completely stable through the quarter. Within that, high-tech manufacturing, which covers electronics, batteries, and AI hardware, surged 12.5 percent.
So, what is the bottom line here? Chinese consumers were not the engine of this growth. Foreign buyers were. And even though exports slowed sharply in March, factories just kept humming along at full pace.
You might be wondering how factories keep running when exports slow down. The answer is lead times. Factories produce to fill orders they received weeks or even months earlier. Those massive orders placed by foreign buyers in January and February were still being built in March, even if fewer of those goods physically left the country due to logistics bottlenecks and tariffs.
But there is a second reason those factories stayed at full capacity in March, and this one matters a lot more. They could keep producing at a low energy cost, while their European competitors simply could not.
When the war caused global energy prices to spike, European factories took a heavy hit. China, on the other hand, was insulated for three specific reasons. They had built up massive oil and gas stockpiles before the conflict. They get a huge share of their energy through pipelines from Russia and Central Asia, bypassing the Middle East entirely. And their exports are increasingly skewing toward the very products the world needs when energy is expensive, like EVs, batteries, and solar equipment.
Because of these built-in buffers, Chinese producers enjoyed a temporary, but significant, cost advantage over Europe in March.
But stockpiles eventually run out. Buying replacement oil costs a lot more than using what you stored. The second quarter of 2026 will be the first full quarter of war. That is when we find out exactly how long China's advantage holds up.
[WHAT IT MEANS FOR BUSINESS]
So, what does this actually mean for business?
The impact is uneven, and it comes with an expiration date.
Right now, Chinese manufacturers have a temporary cost advantage over their Western competitors because of those energy buffers we just talked about. But that advantage is going to narrow over the next few quarters as those stockpiles deplete.
Here is the breakdown.
For companies competing against Chinese manufacturers, particularly European industrial producers, your immediate problem is that your energy costs just spiked while your competitors in China saw almost no change. That widens the price gap between your local products and Chinese imports. German carmakers, machinery producers, and chemical companies are feeling this squeeze the hardest. Japanese and Korean producers are facing the exact same dynamic in third-party markets where they go head-to-head with China.
Now, if you buy from Chinese suppliers, that same dynamic works in reverse. Your Chinese inputs are still cost-competitive while your local alternatives are getting pricier. That is great news for importers, distributors, and companies building renewable energy capacity, since China completely dominates that hardware supply.
But there is a third group we need to talk about. Companies that sell into the Chinese consumer market, like foreign luxury brands, automakers targeting Chinese households, or retailers with big operations in China, have a completely different problem. Chinese consumers are still incredibly cautious. That 1.7 percent retail growth in March proves that domestic demand is simply not bouncing back.
[WHAT SHOULD BUSINESS LEADERS DO NOW]
So, what to do now?
The test comes down to one simple question. Do you compete with Chinese companies, buy from them, or sell to them?
If you compete with them, hedge your energy and logistics exposure immediately for this quarter. Stress-test your pricing against the Chinese goods landing in your market. You need to decide right now which product lines you defend and which ones you exit. You might even start looking at how to reposition your business toward segments where deep engineering, certifications, or strong client relationships protect you from a sheer volume war. You should also consider M&A to consolidate scale.
If you buy from China, your window is tight. Lock in your supply and build up selective inventory right now while that cost advantage is still there. Negotiate your longer-term contracts before political pressure in the US and Europe triggers new tariffs. Use this temporary cost advantage to capture market share, not just pad your margins. And start building alternative sourcing in parallel, because again, this advantage will not last forever.
Finally, if you sell to the Chinese consumer, it is time to rewrite your assumptions. Those consumers are not going back to pre 2020 spending patterns. Your 2026 business plan needs to reflect much weaker retail demand for the rest of the year.
[OUTRO: AMINE LAOUEDJ, MANAGING DIRECTOR]
Thank you for listening to this episode of What It Means for Business. Have a good week.
China reported 5% GDP growth in the first quarter of 2026, the first hard data from any major economy covering part of the Iran war. The headline beat expectations, but the real story is inside the number.
In each episode of the What It Means for Business podcast, Glenshore's Managing Director Amine Laouedj explains what changed last week, why it matters, and what business leaders should do now to adapt.
Date of production: 20 April 2026
Disclaimer: This show is produced by Glenshore, the boutique investment bank headquartered in London, specializing in cross-border M&A and strategic advisory. The analysis contained in this material reflects publicly available information as of the date of publication, sourced from official filings, academic literature, and verified secondary sources. No proprietary or non-public data has been used. The views expressed are those of Glenshore and are provided solely for informational and educational purposes. They do not constitute investment or financial advice and should not be interpreted as a recommendation to take any particular action. This material may contain forward-looking statements. Past performance is not indicative of future results. Glenshore makes no representations or warranties regarding the accuracy or completeness of this information and disclaims any liability arising from reliance upon it for any purpose. Any third-party names, trademarks, or logos referenced in this material are the property of their respective owners and are used strictly for identification purposes. This material may not be copied, distributed, published, or reproduced in whole or in part without the express written consent of Glenshore.
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