China’s Economic Growth Surpasses Expectations Amid Escalating Trade Tensions

Beijing, 16 April 2025 (BSS/AFP) – China announced on Wednesday that its economy grew faster than anticipated in the first quarter of 2025, buoyed by a surge in exports as businesses rushed to ship goods ahead of the United States’ imposition of sweeping tariffs. However, Chinese officials cautioned that the country still faces significant economic headwinds, particularly from mounting trade tensions under former President Donald Trump’s renewed tariff policies, coinciding with what he has termed "Liberation Day".

The ongoing trade standoff between Beijing and Washington has escalated rapidly since the US administration launched a broad tariff offensive, with Chinese imports particularly targeted. The exchange of retaliatory measures has seen US tariffs on Chinese goods climb to an eye-watering 145 percent, with China responding with 125 percent tariffs on American imports.

Data released by the National Bureau of Statistics (NBS) offered the first concrete insight into how the world’s second-largest economy is coping with the dual challenges of global trade uncertainty and domestic economic fragility. China is still grappling with a prolonged property sector downturn and persistently subdued consumer spending — both key areas dragging on a full economic recovery.

“At present, the imposition of high tariffs by the United States will exert certain pressures on China’s foreign trade and economic development,” said Sheng Laiyun, Deputy Commissioner of the NBS, during a press briefing. “However, this will not alter the long-term trajectory of China’s economic improvement.”

According to preliminary estimates, China’s Gross Domestic Product (GDP) rose by 5.4 percent year-on-year during the first quarter, outpacing analysts’ expectations of 5.1 percent. This is a positive signal for policymakers, particularly in light of an ambitious 5 percent growth target set by top Chinese leadership for the full year — a goal many observers have described as optimistic.

Retail sales, often viewed as a key indicator of domestic demand, grew by 4.6 percent year-on-year, exceeding forecasts. The increase follows a series of government efforts to stimulate household consumption after several years of sluggish expenditure. Industrial output also showed robust growth, jumping 6.5 percent in the first quarter — a marked rise from 5.7 percent at the end of 2024.

Nonetheless, the government acknowledged that the global economic environment is becoming “increasingly complex and severe,” and that further "proactive and effective macro policies" will be necessary to consolidate growth and revive domestic confidence. “The foundation for sustained economic recovery is yet to be firmly established,” the NBS noted.

Further complicating the picture, trade data released earlier this week showed Chinese exports surged over 12 percent year-on-year in March, smashing expectations. Analysts attributed this spike to “front-loading” — the early shipping of goods to avoid Trump’s fresh round of tariffs, which took effect on 2 April.

While this export rush has temporarily boosted growth figures, economists warn the positive momentum may be short-lived. Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management, remarked, “The damage from the trade war will become more evident in the macroeconomic data next month.”

Similarly, Steve Innes of SPI Asset Management said the upbeat numbers “might look like a win on the surface”, but pointed out that “much of this was front-loaded — a burst of activity ahead of the tariff hikes and stockpiling by US importers.”

In response to the shifting trade landscape, China has appointed Li Chenggang — a seasoned trade negotiator and former representative to the World Trade Organization in Geneva — as its new chief trade envoy. His appointment is seen as a strategic move to navigate the turbulent terrain of global trade and safeguard China’s economic interests.

China’s economic engine, once fuelled by double-digit growth, has struggled to regain its pre-pandemic dynamism. Last year, Beijing rolled out a range of stimulus measures — including interest rate cuts, the relaxation of home-buying restrictions, and increased fiscal flexibility for local governments. However, confidence in a large-scale economic “bazooka” waned as authorities refrained from announcing a detailed stimulus package or specific bailout commitments.

Despite this, Chinese officials reiterated on Wednesday that they remain confident in achieving the country’s development goals. “We have the strength, capability, and confidence to withstand external shocks and realise our set targets,” said Sheng.

The coming months are likely to test that confidence as the global economic and geopolitical landscape grows more uncertain.