China's Economy Faces Uncertainty Amid US Trade War

The Chinese government has ordered its domestic airlines to stop accepting deliveries of Boeing jets and buying parts from US companies amid escalating trade tensions between China and the US. The move comes after China increased its retaliatory tariffs on US goods to 125%, which would more than double the price of US-made aircraft and parts, making them unaffordable. Boeing is scheduled to ship around 10 737 Max aircraft to Chinese carriers, but some may still be delivered if payment and delivery paperwork was completed before the trade war expanded.

Asia-Pacific markets mostly fell on Wednesday, with Hong Kong's Hang Seng Index dropping 2.11% and mainland China's CSI 300 declining 0.84%. China's economy grew 5.4% in the first quarter, exceeding expectations, despite US tariff threats prompting major investment banks to lower China's annual growth forecast. Japan's Nikkei 225, South Korea's Kospi, and Kosdaq also fell, while Australia's S&P/ASX 200 rose 0.19%. US stock futures slipped ahead of a key retail sales report and earnings releases, with Dow Jones Industrial Average futures down 0.3%. Gold prices hit a record high amid tariff uncertainty.

China's economy grew 5.4% in the first quarter, surpassing expectations of 5.1%, driven by a broad policy stimulus push that boosted consumption and investment. Retail sales rose 5.9% in March, beating estimates, while industrial output expanded 7.7%. However, the statistics bureau warned that the external environment is becoming more complex and severe, and that domestic demand remains insufficient. Economists cautioned that the trade war with the US could dent China's exports and slow growth, with several investment banks cutting their growth forecasts. The Chinese leadership has set an annual growth target of "around 5%", which is seen as challenging to achieve.

China's economy grew 5.4% in the first quarter, beating expectations, but this strong growth is unlikely to continue due to the impact of US tariffs imposed as part of the trade war. Exports, which account for a fifth of China's economy, surged 12% in March as companies rushed to deliver orders before tariffs took effect, but this rate is unsustainable. The full impact of tariffs, currently standing at 145%, has yet to be seen, and with domestic consumer confidence sluggish, China is likely to miss its annual growth target of 5%.

China's economy grew 5.4% in the first quarter of 2025, beating expectations and staying on track to meet the official annual growth target of around 5%. The growth was in line with the previous quarter, with a 1.2% quarter-on-quarter expansion. While the figures were positive, concerns remain about the impact of the ongoing trade war with the US, with officials warning of a complex and severe external environment and insufficient domestic demand.

China's trade with Southeast Asia may offset the economic damage caused by US tariffs, according to the Asean+3 Macroeconomic Research Office. The US tariffs, which have reached 145%, could limit China's GDP growth to 4.8% this year, down from its official target of around 5%. However, China's deepening trade ties with Southeast Asia are expected to help fill the void left by reduced access to the US market, potentially mitigating the negative impact on its economy.

China's economy grew 5.4% in the first quarter of 2025, but is expected to slow as the trade war with the US intensifies; Beijing plans to boost domestic consumption to offset the impact, relying on Chinese consumers to support its manufacturing industries.