At 5.4%, China’s Q1 GDP growth beats expectations: 10 key takeaways

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China Q1 GDP growth beats expectations

China’s economic system posted stronger-than-expected growth within the first quarter of 2025, providing a short lived enhance earlier than the complete influence of newly imposed US tariffs begins to chew. According to information launched Wednesday by the National Bureau of Statistics (NBS), gross home product rose 5.4% year-on-year within the first three months—above the 5.2% consensus forecast from economists surveyed by Bloomberg.
But the celebratory tone is already fading. The information displays circumstances earlier than April, when US President Donald Trump dramatically raised tariffs on Chinese imports, triggering retaliation from Beijing. With levies now as excessive as 145%, economists warn that China’s growth engine—exports—might stall, rising strain on policymakers to step in with stimulus.
1. GDP growth surpasses expectations
China’s economic system expanded 5.4% within the first quarter in comparison with the identical interval a 12 months in the past. That efficiency exceeded each Bloomberg and Reuters forecasts and matched This autumn’s tempo. However, analysts say this resilience was largely front-loaded. “Before the tariff storms hit, China’s GDP growth likely eased but remained solid, thanks to the recovery in domestic demand,” Societe Generale analysts famous.
2. Industrial output exhibits strongest growth since 2021
March industrial manufacturing rose 7.7% year-on-year, the quickest since June 2021. The surge is attributed to factories racing to meet abroad orders forward of tariff hikes. “Industrial production was a beat but understandable after the strong export data. But that’s all in the past now,” mentioned Michelle Lam, Greater China economist at Societe Generale.
3. Retail gross sales soar on stimulus assist
Retail gross sales climbed 5.9% in March, one of the best exhibiting since December 2023 and nicely above expectations. “The most pleasant surprise is retail sales which shows that consumption subsidies are working,” Lam added. However, weak labor market confidence continues to constrain spending potential, particularly as commerce tensions weigh on job stability.
4. Fixed-asset funding rises, property sector declines
Fixed-asset funding rose 4.2% within the first quarter, exhibiting regular growth in infrastructure and manufacturing. But property funding fell sharply by 9.9%, reflecting ongoing misery in China’s actual property sector. The extended stoop in housing continues to tug on broader financial momentum.
5. Unemployment charge drops barely
China’s city jobless charge fell to five.2% in March from 5.4% in February. While the drop alerts some enchancment, analysts say the job market stays fragile and will deteriorate as export-oriented industries face shrinking orders.
6. Policymakers sign extra stimulus forward
The NBS acknowledged the mounting dangers in its assertion: “The external environment is becoming more complex and severe… and the foundation for sustained economic recovery and growth is yet to be consolidated.” Economists anticipate charge cuts, decrease financial institution reserve necessities, and trillions in fiscal stimulus within the coming months.
7. Tariffs forged shadow over growth outlook
The upbeat Q1 figures masks what analysts anticipate to be a pointy slowdown within the months forward. Trump’s new tariff bundle lifted duties on most Chinese items to 145%, triggering tit-for-tat retaliation by Beijing. “We think the tariff shock poses unprecedented challenges to China’s exports,” UBS analysts wrote in a latest downgrade of their growth forecast.
8. Export rush in March more likely to reverse
March’s export surge was seen as a short lived spike, pushed by companies speeding to ship items earlier than tariffs hit. With levies now energetic, April and May are more likely to present a pointy pullback. “Trade activities have likely slowed rapidly this month as global companies paused orders and reduced production,” analysts warned.
9. Economists downgrade 2025 growth forecasts
UBS reduce its 2025 growth forecast for China to three.4% from 4%, whereas Goldman Sachs and Citigroup have additionally issued downward revisions. Without main stimulus, Beijing might miss its 5% growth goal for the 12 months. The tariff shock has amplified pre-existing weaknesses, together with sluggish demand and rising debt.
10. Markets and Yuan largely unmoved by information
Despite the better-than-expected information, Chinese shares remained below strain. The Hang Seng China Enterprises Index fell as a lot as 2.4%, whereas the CSI 300 dropped 0.8%. The yuan held regular at 7.3236 in offshore buying and selling, reflecting muted investor optimism amid geopolitical tensions and financial uncertainty.
(With inputs from companies)