China’s economy beat expectations to expand by 5.4% in the first quarter, keeping it broadly on track to meet this year’s official target even as uncertainty remains high over how the economy will fare amid an unprecedented trade war with the United States. The closely watched gross domestic product (GDP) figures, released by the National Bureau of Statistics (NBS), came in above the 5.16% forecast by economists polled by Chinese financial data provider Wind.
The year-on-year growth in the first three months of 2025 was in line with the 5.4% expansion recorded in the previous quarter. On a quarter-on-quarter basis, the economy grew by 1.2%. Beijing has set an annual growth target of around 5%, but worries are mounting over how the country can achieve this challenging goal, which would require strong fiscal support – especially amid escalating external shocks from a tariff tit-for-tat with Washington. Sheng Laiyun, Deputy Director of the NBS, said the economy “got off to a good and steady start and maintained the recovery momentum, with innovation playing an increasingly leading role” in the first quarter. But he cautioned that “the external environment is becoming more complex and severe, the growth of effective domestic demand is insufficient, and the foundation for sustained economic recovery and growth is yet to be consolidated”.
China’s leaders are still committed to hitting this year’s growth targets in spite of growing headwinds, Sheng said. “We have the confidence, ability and determination to withstand external challenges and achieve our development goals,” he stressed. Retail sales rose by 5.9% in March, year-on-year, compared with the 4% growth seen in the first two months. Beijing is placing high hopes on domestic demand – particularly consumption – to drive economic growth this year, as external pressures mount. In a bid to spur spending, leading bodies of China’s state apparatus and the ruling Communist Party issued a 30-point plan aimed at stimulating consumer demand. Minister of Commerce Wang Wentao pledged greater support for service consumption, saying China would ramp up efforts in sectors such as catering, hospitality, domestic services, elderly care, tourism, sports and healthcare. “The global environment is becoming more challenging, with weakening growth momentum, deepening fragmentation, and mounting barriers to international economic flows,” he wrote, adding that China also planned to add categories such as camping, homestays, property services, and online medical services to its list of industries encouraging foreign investment.
Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management, cautioned that although the economy beat forecasts in the first quarter, “the damage from the trade war will show up in the macro data next month”. “Supply chains are disrupted, and ripple effects will likely show up in many countries. The uncertainty is extremely high for corporates and investors,” he said. January-March fixed-asset investment increased by 4.2% from a year earlier. Property investment, a heavy drag on economic growth last year, fell 9.9% in the first quarter, the South China Morning Post reports.
