China’s economy demonstrated significant resilience in the first quarter of 2025, achieving a robust growth rate of 5.4%. This figure surpassed analyst expectations and highlights the nation’s economic momentum despite increasing global headwinds, according to the National Bureau of Statistics of China.
The report indicated that industrial output was the primary driver of this expansion, registering a substantial 6.5% increase, the highest among all sectors. The service sector also made a strong contribution, growing by 5.3%, while retail sales and agricultural production saw increases of 4.6% and 4.0%, respectively. The statistics agency lauded this performance as a “good start” to the year, emphasizing the “new momentum” gained in high-quality development during the first quarter.
However, the agency also issued a cautionary note, highlighting a “more complex and severe” external environment that poses a threat to China’s economic stability. They stressed that the foundation for a sustained recovery remains “unconsolidated.”
A key factor contributing to this uncertainty is the escalating trade war between the United States and China. President Donald Trump’s recent imposition of a significant 145% tariff on Chinese goods, targeting crucial exports such as semiconductors and critical minerals, has intensified trade tensions.
China responded swiftly with retaliatory measures, levying a 125% duty on US products and pledging to “fight to the end” if trade hostilities continue to escalate.
Analysts have offered insights into the implications of these developments. Alicia García-Herrero, chief economist for Asia Pacific at Natixis, pointed out that the strong Q1 growth was largely fueled by exports. She cautioned that the ongoing trade tensions could negatively impact growth in the second quarter.
Lynn Song, chief economist for Greater China at ING, anticipates that the Chinese government will likely implement further monetary and fiscal stimulus measures to ensure it meets its 2025 growth target of approximately 5%.
The economic data, released today, underscores the dual nature of China’s current economic situation – a display of underlying strength coupled with significant vulnerabilities in the face of an increasingly turbulent global landscape. As the world’s two largest economies engage in a trade war, the potential ripple effects threaten to reshape global supply chains and impact economic forecasts for the remainder of 2025.
