China's Q1 GDP Surprises with 5.4% Growth

China's economy grew 5.4% in the first quarter, surpassing expectations of 5.1%, driven by a broad policy stimulus push. Retail sales rose 5.9% year-on-year in March, beating estimates, while industrial output expanded 7.7%. However, the economy faces headwinds from a trade war with the US, with several investment banks cutting growth forecasts, including UBS, which projects 3.4% growth this year. Chinese officials are expected to release more stimulus measures to bolster domestic consumption and the housing market.

China's economy grew 5.4% in the first quarter of 2025, exceeding expectations of 5.1%, as the country continued its recent run of strong export-driven growth. The National Bureau of Statistics attributed the growth to a "steady and good start" to the year, but noted that the external environment is becoming increasingly complex and severe. The data was released before the full impact of US President Donald Trump's tariffs, which have now exceeded 145%, took effect. Economists believe it will be challenging for China to maintain this growth momentum due to the tariffs, with some downgrading their growth forecasts for 2025 to 3.4% or 4%. Despite this, Chinese officials remain optimistic, pointing to the country's diversified trade relationships and its ability to weather external challenges.

China's economy grew 5.4% in the first quarter, exceeding expectations, but this growth is unlikely to be sustained due to the ongoing trade war with the US. The tariffs imposed by the US, which rose to 20% in March and currently stand at 145%, were not fully reflected in the first-quarter figures. Exports surged 12% in March as exporters rushed to deliver orders before the tariffs took effect, but this rate is unsustainable. As exports account for a fifth of China's economy and domestic consumer confidence is sluggish, a significant impact from the tariffs is expected, potentially causing China to miss its annual growth target of 5%.

China's economy grew 5.4% in the first quarter of 2025, beating expectations and matching the previous quarter's growth rate, despite uncertainty surrounding the ongoing US trade war. The growth was in line with Beijing's annual target of around 5%, but concerns remain about achieving this goal due to external shocks and insufficient domestic demand.