China beat first-quarter economic growth expectations, but the outlook for the remainder of 2025 remains dim as Beijing braces for the impact of hefty U.S. tariffs.
The latest data indicates China’s gross domestic product (GDP) grew 5.4% in the January-March quarter from a year earlier, beating analysts’ expectations in a Reuters poll for a rise of 5.1%.
Meanwhile, retail sales, a key gauge of consumption, to just under 6% year-on-year in March after gaining 4% in January-February, while factory output growth quickened to 7.7% from 5.9% in the first two months. Both numbers topped analysts’ forecasts.
But these figures preceded President Donald Trump ratcheting up tariffs on Chinese goods to eye-watering levels, prompting Beijing to slap retaliatory duties on U.S. imports in an intensifying trade war between the world’s two biggest economies that markets fear will lead to a global recession.
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Analysts also say a surge in China’s March exports – driven by factories rushing shipments to beat the latest Trump tariffs – will reverse sharply in the months ahead as the hefty U.S. levies take effect.
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While several other countries have been swept up in U.S. tariffs, Trump has targeted China for the biggest levies.
Last week, Trump lifted duties on China to 145%, prompting Beijing to jack up levies on U.S. goods to 125% and dismissing U.S. trade actions as “a joke.”
On a quarterly basis, the economy expanded 1.2% in the first quarter, slowing from 1.6% in October-December.
For 2025, China’s economy is expected to grow at a subdued 4.5% pace year-on-year, the Reuters poll showed, slowing from last year’s 5.0 pace and falling short of the official target of around 5.0%.
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Policymakers have repeatedly said the country has ample room and tools to bolster the economy and premier Li Qiang this month pledged to roll out more support measures.
Beijing has put boosting consumption as the top priority this year as it tries to cushion the impact of the Trump administration’s tariffs on its trade sector.
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The Politburo, a top decision-making body of the ruling Communist Party, is expected to hold a meeting later this month to set its policy agenda for the coming months.
Reuters contributed to this report.
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