China’s Economy Beats Q1 Growth Forecasts, But U.S. Tariff Storm Threatens the Horizon

Source: Reuters : China’s Q1

What Happened?

• China’s Q1 GDP grew 5.4%, exceeding expectations (5.1% forecast).
  
• Strong consumer spending and industrial output fueled the rise.
  
• But a rising U.S.-China trade war may derail momentum in upcoming quarters.
  

What’s the Problem?

• Donald Trump hiked tariffs on Chinese goods to 145%.
  
• China hit back with 125% duties on U.S. products.
  
• These escalating tariffs pose a historic threat to China’s export-led growth.
  

 Key Data Highlights:

Indicator	Q1 2025 Performance	Insight
GDP (YoY)	+5.4%	Beat 5.1% estimate
GDP (QoQ)	+1.2%	Slowed from 1.6% in Q4
Retail Sales (March)	+5.9%	Strong rise from +4.0%
Factory Output	+7.7%	Stronger than expected
Property Investment	-9.9%	Continues to decline

Tariff Trouble:

• March export surge was due to last-minute shipping before tariffs.
  
• Experts fear this will reverse sharply in coming months.
  
• GDP forecasts cut:
  
  • ANZ: 2025 downgraded to 4.2% (from 4.8%)
    
  • UBS: Cut to 3.4% (from 4%)
    

 Other Concerns:

• Youth unemployment and deflation still loom large.
  
• The property sector remains weak.
  
• Despite the positive GDP, stock market and yuan fell due to low investor confidence.
  

Expert Insights:

“Good GDP does not represent the overall economic health.”
— Raymond Yeung, ANZ

“Unprecedented challenges ahead; major economic adjustments needed.”
— UBS Analysts

“Only a large fiscal expansion may help cushion the tariff shock.”
— ANZ

🔮 What’s Next?

• More stimulus expected — both monetary and fiscal.
  
• But with rising debt, Beijing must tread carefully.
  

The U.S.-China tariff war could become the defining economic risk of 2025.

Read More : U.S.-China Tariff Showdown: A Full-Blown Trade Battle