China’s economy expanded 5.4% in the first quarter of 2025, exceeding expectations on solid consumption and factory production. | Photo credit: Go Nakamura/Reuters
The economic growth of the first quarter of China exceeded expectations, backed by solid consumption and industrial production, even when policy formulators prepare for the impact of US tariffs that, according to analysts, represent the greatest risk for Asian power in decades.
President Donald Trump has increased tariffs on Chinese products to water water levels, which led Beijing to Slak retaliation in US imports in an intense commercial war between the two largest economies in the world than the markets fear the recession.
Wednesday’s data The Gross Domestic Product (GDP) of Shina grew 5.4% in the quarter of January-March of the previous year, without changes from the fourth quarter, but exceeded the expectations of analysts in a reuters survey for an increase of 5.1%.
However, the perspective is expected to be mitigated, since Washington’s tariff shock hits the crucial export engine, accumulating pressure on Chinese leaders while trying to maintain the second largest economy in the world in a uniform throat and avoid losses of mass jobs.
A recent data chain has indicated an unequal economic recovery, with the bank expiration expectations and factory factory activity. But the highest and persistent deflationary pressures are feeding Conerns about weak demand.
Moreoover, analysts say that an increase in China’s exports in China, driven by factories that rush to overcome Trump’s last tariffs, will be considerably reversed in the coming months as the taxes of the United States arise validity.
“Before the storms arrived tariffs, China’s growth probably decreased but remained solid, thanks to the recovery of domestic demand,” Societe analysts said in a note.
“In general, the GDP report should show that the stimulus is working, but support will not stop here with greater tariff challenges ahead. The policy set on.”
While several other countries have been swept in the United States rates, Trump has attacked China for the greatest levies.
Last week, Trump raised duties in China to 145%, which led Beijing to increase taxes on US goods to 125% and discard commercial actions in the United States as “a joke.”
Quarterly, the economy expanded 1.2% in the first quarter, decreasing 1.6% in October-December.
Retail sales, a key indicator of consumption, increased 5.9% year-on-year in March after 4.0% in January-February, while factor production growth accelerated to 7.7% of 5.9% in the first two months. Both numbers exceeded the analysts’ forecasts.
By 2025, the economy is expected to grow at a subjected pace of 4.5% year after year, it showed the Reuters survey, reducing the rhythm of recent years 5.0 and not reaching the official objective of around 5.0%.
UBS has reduced its prognosis on the growth of 2025 from China to 3.4% from 4%, assuming that Chinese-American rates increases will remain in place and that Beijing will launch an additional stimulus.
“We believe that the tariff shock raises unprecedented challenges for China’s exports and will also establish an important adjustment in the national economy,” UBS analysts said in a note.
Wide space for stimulus
Policy formulators have repeatedly said that the country has ample space and tools to reinforce the economy and Prime Minister Li Qiang committed this month to implement more support measures.
Beijing has put impulse consumption as the main priority this year while trying to cushion the impact of Trump administration rates on their commercial sector.
It is expected that the Politburo, a decision -making body of the ruling communist party, celebrates a meeting at the end of this month to establish its political agenda for the coming months.
In March, China released fiscal measures, including an increase in its annual budget deficit. The officials have marked more fiscal and monetary stimulus to deal with the winds against increasing. That followed a bombing or monetary steps at the end of last year.
Earlier this month, Fitch reduced China’s sovereign credit qualification, citing the rapid increase of the BRT government and the risks to public finances, which suggests a difficult equilibrium act for those responsible for formulating policies that seek to expand consumption to protect against a trade.
Posted on April 16, 2025
