China's economy grew faster than expected in the first quarter of the year, with 5.4 percent expansion run by strong industrial production and domestic consumption-a demonstrations that the economists warned that it could prove to be short-lived because American tariffs begins to bite.
Strong-to-forecast GDP data released by Beijing on Tuesday revealed that the world's second largest economy continues to avoid global headwinds during the January-March period. Analysts expected an increase of 5.1 percent, welcome to the real utkorne. However, it came a few weeks ago when 145 percent of the US tariffs were effective on Chinese goods, as President Donald Trump intensified a trade war that many fears could trigger a broad global recession.
The quarterly development figure matched for the last quarter of 2024, suggesting that China had maintained economic pace despite frequent deflation pressure and concerns on unemployment. A crowd of exports in front of the tariff deadline contributed to flexibility, as the manufacturers accelerated the shipment to defeat the US Levi.
A major barometer of retail sales consumption rose 5.9 percent year-on-year at March, which increased by 4.8 percent in January and February. Meanwhile, industrial production rose 7.7 percent in March, increased from 5.9 percent in the first two months, as the output of new trade barriers increased.
“Before the tariff storm came out, China's probability of growth decreased, but remained solid for recovery in domestic demand.” “Overall, the GDP report should show that the incentive is working, but the support will not stop here with big tariff challenges. The policy has said.”
Nevertheless, the concern is increasing that the speed of development will slow down through the remaining part of 2025. The UBS has reduced its entire year GDP forecast for China by 3.4 percent, citing the impact of the constant American trade tariff and the possibility of further internal economic adjustment.
UBS economists told customers in a note, “We think tariff shock creates unprecedented challenges for China's exports and will also make a major adjustment in the domestic economy.”
Beijing has already announced ventilative measures on American imports, which increases the possibility of destabilizing long and tight-for-tat disputes between the world's two largest economies. Economists warns that when short -term stimulation is shocking, continuous trade tension can prevent China's recovery and lead to higher control investment environment.
The Chinese government has set a GDP development target of about 5 percent for 2025, which now looks rapidly ambitious. Despite the ongoing state support and efforts for infrastructure and manufacturing, external pressure is increasing.
Constant deflation has also become a matter of concern, in which producers' prices suggest weakening demand in major areas. At the same time, the youth unemployment remains high, the consumer increases confidence and threatens comprehensive economic stability.
“China has policy tools to respond to a shock,” a senior economist in Shanghai said, “But global business instability, domestic demand and combination of deflation means that there is no place for decency.”
As the US election cycle is hot, President Trump confirmed his protectionist stance, some expect immediate spontaneity under stress. For China, the forward road requires careful balance of short-term stimulation with long-term structural improvements-while whatever trade Salos Washington has done for further fire.
Jamie young
Jamie is a senior reporter in Business Matters, who is bringing more than a decade experience in UK SME business reporting. Jamie holds a degree in business administration and regularly participates in industry conferences and workshops. When not reporting the latest commercial developments, Jamie has emotional about advising journalists and entrepreneurs to motivate the next generation business leaders.