China's economic growth exceeds expectations - But Trump's tariffs risk slowing recovery
China's economic growth in the first quarter exceeded expectations, supported by strong consumption and industrial production. However, analysts fear that momentum could change sharply as U.S. tariffs pose the biggest risk to the Asian powerhouse in decades.
President Donald Trump has raised tariffs on Chinese goods to dizzying levels, prompting Beijing to impose retaliatory tariffs on U.S. imports. The moves have raised risks for the world's two largest economies and rattled financial markets.
Data showed China's gross domestic product (GDP) grew 5.4% in the January-March quarter from a year earlier, unchanged from the fourth quarter but exceeding analysts' expectations in a Reuters poll for a 5.1% increase.
However, growth momentum is expected to cool significantly in the coming quarters as Washington's tariffs hit the crucial export engine, adding pressure on Chinese leaders to implement more support measures.
Government stimulus boosted consumption and supported investment, analysts say, calling the 5.4% pace "a very good start."
Exports have remained a strong point in China's economy, with a trade surplus of $1 trillion last year helping to support growth, although a prolonged property sector downturn and sluggish domestic demand continue to hurt the recovery. That complicates the political challenge for Beijing, as Trump's focus on China's vast trade engine stymies a key growth driver.
For 2025, the economy is expected to grow at a low 4.5% year-on-year pace, a Reuters poll showed, slowing from last year's 5.0% pace and below the official target of around 5.0%. Many analysts have sharply lowered their GDP forecasts for this year.
Last week, Trump raised tariffs on China to 145%, prompting Beijing to raise taxes on American goods to 125%.
Analysts say a surge in China's exports in March, driven by factories rushing shipments to avoid Trump's latest tariffs, will be sharply reversed in the coming months as higher U.S. taxes take effect.
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