China’s economy grows 5.4% in 1st quarter of 2025 before trade war with U.S. intensified

China’s economy grew by 5.4 per cent in the first quarter of 2025, beating expectations and maintaining its momentum before increased tariffs were imposed by the United States.

U.S. tariff threats have since prompted major investment banks to cut the China's annual growth outlook.

China released figures that beat expectations

The gross domestic product (GDP) figures released by the National Bureau of Statistics (NBS) on Apr. 16 was above the 5.16 per cent forecast by economists.

According to CNBC, it was China's broad policy stimulus push that brought about a recovery in its economy in late 2024.

Retail sales in March rose by 5.9 per cent year on year, according to Wednesday's data, surpassing the 4.2 per cent growth estimate.

Industrial output expanded by 7.7 per cent from a year earlier, beating the 5.8 per cent estimates.

The urban unemployment rate fell to 5.2 per cent in March, following a two-year high of 5.4 per cent in February.

Manufacturing also picked up pace.

Weaknesses remain

However, weakness was apparent in real estate within fixed asset investment, which was down by 9.9 per cent for the year as of March, South China Morning Post reported.

Officials also warned about "the external environment" becoming "more complex and severe" and that domestic demand remained insufficient, the English-language release said.

SCMP also reported that China's year-on-year growth in the first three months of 2025 was in line with the 5.4 per cent expansion recorded in the previous quarter.

On a quarter-on-quarter basis, the economy grew by 1.2 per cent.

Trade war weighs heavily on prospects

Beijing has set an annual growth target of around 5 per cent, but the intensified trade war with the United States has weighed heavily on prospects.

The share of China’s exports to the U.S. had declined to 14.7 per cent in 2024 from 19.2 per cent in 2018, the statistics bureau said.

Several investment banks have cut China’s growth forecasts this year though, owing to the trade war.

There is growing anticipation that China will implement more stimulus measures to boost domestic consumption and boost the housing market to counter the potential trade disruption.

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