China has posted unexpectedly strong economic growth in the first three months of 2025, before the full force of US President Donald Trump’s tariffs took effect, and sent an upbeat message about how it plans to weather an ongoing trade war with Washington. Growth in China’s gross domestic product (GDP) hit 5.4% in the first quarter, the National Bureau of Statistics said on Wednesday. That was considerably higher than the expectations of more than 50 economists surveyed by Reuters, who had predicted expansion of 5.1%, and continues a recent run of surprisingly strong export-driven growth seen at the end of 2024. “The national economy had a steady and good start, continuing the upward trend,” Sheng Laiyun, deputy director of the NBS, told a news conference. “However, we must also see that the current external environment is becoming more complex and severe, and the effective domestic demand growth momentum is insufficient.” Growth in China, the world’s second-largest economy, is in the spotlight as it deals with the fallout of an escalating trade war with the United States. And that’s on top of the economic problems it has faced for years: a crisis in the property sector, the specter of falling prices and a reluctance among consumers to spend. The data announced by the NBS covers growth in the first quarter, a particularly eventful time for US-China trade relations. During that period, Trump imposed two rounds of tariffs totaling 20% on China related to fentanyl. The figures do not include the impact of Trump’s additional “reciprocal” tariffs on Chinese imports, which took effect in April. The overall tariffs on China now exceed a staggering 145%. Asked about the impact of the tariffs, Sheng noted that China opposes the US tariff barriers and “trade bullying.” While the tariffs will bring “certain pressure” to bear on the Chinese economy, they “cannot change the general trend of China’s continued long-term economic improvement,” he said. “China’s economic foundation is stable, resilient and has great potential, so we have the courage, ability and confidence to cope with external challenges and achieve the established development goals,” Sheng added. Consumer spending and production also beat expectations, with retail sales rising by 5.9% in March compared with the same month last year, and factory output expanding by 7.7% last month compared with 5.9% in the January to February period. Growth prospects downgraded Last month, Beijing set an ambitious target of “around 5%” growth for this year, in a defiant show of confidence in its export-driven economy. However, economists believe it will be tough to meet this target. This is in part because export growth has been particularly buoyant since the waning months of 2024, when overseas companies increased their orders in anticipation of tariffs to be imposed by Trump. Experts believe exports, which surged by 12.4% in March compared with the year before, will not be able to maintain that strong momentum in the coming months because of the triple-digit levies. “We think the tariff shock poses unprecedented challenges to China’s exports and will set forth major adjustment in the domestic economy as well,” UBS economists led by Tao Wang wrote in a Tuesday research note. They have downgraded their economic growth forecast for 2025 to 3.4% from 4%, with the assumption that the bilateral tariffs remain, and that Beijing will eventually announce additional stimulus measures. Last week, investment bank Goldman Sachs said the US tariffs will “significantly weigh” on the Chinese economy. It has downgraded its GDP growth forecasts for 2025 and 2026 to 4% and 3.5%, respectively, from previous projections of 4.5% and 4%. Zichun Huang, an economist at Capital Economics, wrote in a Wednesday research note that the government is likely to announce more measures to strengthen domestic consumption in the coming months, which she said should be enough to keep growth above 4%. “The budget announced in March allows for a further ramp up in fiscal spending. And further monetary easing is likely to happen soon,” she said, referring to spending by government and moves by the central bank to make borrowing more accessible. Diversifying trade Like Chinese leaders at the opening of China’s parliament last month, Sheng has sought to project optimism in the country’s ability to stay the course, despite mounting trade pressure from the world’s largest economy and its mercurial president. Sheng pointed out to reporters that China has been diversifying its trading relationships beyond the US since the first trade war with the US. China’s exports to the US as a percentage of total overseas shipments dropped from 19.2% in 2018, to 14.7% in 2024, he added. “A diversified market pattern is taking shape, which also means that our dependence on a single export market in a certain country is declining,” he said. “Therefore, China’s foreign trade is relatively resilient. The just-released first-quarter foreign trade data also shows that despite the increase in external restrictions, exports still grew by 6.9%.” On Wednesday, Beijing named Li Chenggang to the position of international trade negotiation representative and vice commerce minister. He replaced Wang Shouwen, who had played a major role in trade negotiations during Trump’s first term. China is going on a global charm offensive to promote itself as a more politically and economically stable partner than the United States. Chinese leader Xi Jinping is currently on a week-long tour of Southeast Asia with that mission in mind. As a bloc, the 10-country Association of Southeast Asian Nations overtook the US and the European Union as China’s largest export market in 2023. In meetings with Vietnam’s top leadership on Monday, Xi said the two countries should work together to maintain “the stability of the global free trade system and industrial and supply chains,” according to Chinese state news agency Xinhua. This story has been updated with additional reporting and context.
China posts unexpectedly strong economic growth before tariffs bite
TruthLens AI Suggested Headline:
"China Reports Strong Q1 Economic Growth Amid Rising U.S. Tariffs"
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TruthLens AI Summary
In the first quarter of 2025, China reported a surprising 5.4% growth in its gross domestic product (GDP), surpassing the expectations of economists who had predicted a 5.1% increase. This growth follows a trend of robust export-driven performance seen at the end of 2024, despite increasing trade tensions with the United States. Sheng Laiyun, deputy director of the National Bureau of Statistics (NBS), indicated that the economy had a steady start to the year, although he acknowledged the complexities and challenges posed by the external environment, including the impact of U.S. tariffs. The tariffs, which have now exceeded 145%, were implemented as part of President Trump's strategy against China, and their full effects are yet to be realized. Despite these pressures, Sheng expressed confidence in China's economic resilience and potential for long-term improvement, suggesting that the country has the capacity to adapt and meet its development goals.
Consumer spending and production figures also exceeded expectations, with retail sales rising by 5.9% in March year-over-year and factory output expanding by 7.7%. However, economists are cautious about sustaining this growth momentum, particularly in light of recent tariff implementations that may hinder export growth, which surged by 12.4% in March. Economic forecasts have been downgraded by several banks, including UBS and Goldman Sachs, citing the significant challenges posed by U.S. tariffs. Analysts anticipate that the Chinese government may introduce additional measures to bolster domestic consumption and mitigate the effects of external pressures. Furthermore, China is actively diversifying its trading partnerships beyond the U.S., which has seen its share of China's total exports decline. As part of a broader strategy to strengthen economic ties, Chinese leaders are engaging with Southeast Asian nations, positioning themselves as stable partners in contrast to the U.S. amidst ongoing trade disputes.
TruthLens AI Analysis
The article presents an intriguing picture of China's economic performance amidst a challenging trade environment, particularly with the United States. The unexpected 5.4% GDP growth reported for the first quarter of 2025 suggests resilience in the Chinese economy, even as it faces significant external pressures from tariffs.
Economic Growth vs. External Pressures
The article highlights the contrast between China's reported economic growth and the impending challenges from U.S. tariffs. This growth is framed as a positive sign, suggesting that China is capable of weathering economic storms. However, there is an acknowledgment of the complex external environment and insufficient domestic demand, indicating that while growth is present, it may not be sustainable in the long term.
International Trade Relations
In the context of U.S.-China relations, the article emphasizes the impact of tariffs imposed by the Trump administration and the broader implications for the trade war. By stating that the tariffs exceed 145%, it underscores the severity of the situation. The Chinese government’s response, labeling U.S. tariffs as "trade bullying," serves to position China as a victim of external pressures, shaping public perception in a way that could galvanize domestic support.
Public Sentiment and Perception
The article seems to aim at fostering a sense of optimism while simultaneously acknowledging the challenges. By focusing on the positive growth figures and the government’s commitment to long-term improvement, it may be attempting to reassure both the domestic audience and international investors. This dual messaging might be designed to bolster confidence in the Chinese economy and mitigate potential panic over trade tensions.
Implications for Future Economic Policies
The mention of ongoing challenges such as the property sector crisis and consumer reluctance hints at deeper issues within the economy that are not fully resolved. This could suggest a potential shift in economic policy focus, as the government may need to address these underlying problems to maintain growth momentum.
Market Reactions and Global Impact
The reported growth figures could influence global markets, particularly in sectors reliant on Chinese exports. Investors might respond positively to the news, potentially leading to an uptick in stock prices of companies with significant exposure to China. However, the looming tariffs could counterbalance this optimism, leading to volatility in markets as investors assess the long-term implications.
Target Audience and Support Base
The article likely appeals to a broad audience, including policymakers, business leaders, and the general public in China. By promoting a narrative of resilience and growth, it seeks to instill confidence among citizens and stakeholders who may be concerned about the effects of trade tensions.
Trustworthiness of the Information
While the reported economic growth figures appear to be backed by data from the National Bureau of Statistics, the framing of the information raises questions about its objectivity. The language used, particularly around tariffs and trade bullying, suggests an effort to influence public sentiment and could be seen as somewhat manipulative. The portrayal of growth amidst adversity can be interpreted as a strategic narrative to maintain national pride and optimism.
In summary, the article serves multiple purposes: it informs about economic performance, addresses the challenges posed by tariffs, and attempts to shape public perception in favor of the Chinese government’s economic management. The blend of positive economic indicators with caution regarding external pressures suggests a carefully crafted message aimed at maintaining stability and confidence.