China’s Q1 GDP grows 5.4%, beating expectations amid tariff tensions—Key takeaways

China's economy got off to a surprisingly strong start in early 2025, giving it a short-term lift before new US tariffs start to take a toll. Between January and March, China's GDP grew by 5.4 per cent compared to the same period last year. A big driver behind that growth? A rush of exports ahead of steep new US tariffs, according to a government report released Wednesday.

But analysts are warning that this pace won’t last. With US tariffs on Chinese goods now climbing as high as 145 per cent, many expect the world’s second-largest economy to slow down in the coming months.

Exports have been key to China’s growth, helping it hit a 5 per cent target in 2024. That same target holds for 2025, though hitting it will be harder with trade tensions heating up.

Also Read:Trump Pauses ‘Reciprocal Tariffs’ for Most Nations, But Slaps 145% on China: A timeline of events

Here are key takeaways from China's GDP data: 

1. China’s economy grew by 5.4 per cent in the first three months of 2025 compared to the same time last year. This beat expectations and is in line with the government’s goal of around 5 per cent growth for the year.

2. A big part of this growth came from a rush in exports. Chinese companies hurried to send goods overseas before the US increased tariffs on Chinese products by 145 per cenrt. In response, China raised tariffs on US goods by 125 per cent, but still said it supports open trade and investment.

3. However, growth is slowing down. Compared to the last three months of 2024, the economy only grew 1.2 per cent, down from 1.6 per cent in the previous quarter.

4. In March, exports were over 12 per cent higher than they were a year earlier, which resulted in boosting factory activity and supported China’s manufacturing industry.

5. Industrial production grew by 6.5 per cent. Equipment manufacturing did especially well, growing by nearly 11 per cent compared to last year.

Also Read:US tariffs could shrink global trade by 3%: UN economist

6. High-tech industries showed strong growth. Production of electric and hybrid vehicles jumped by 45.4 per cent, 3D printers by almost 45 per cent, and industrial robots by 26 per cent.

7. Still, there are signs of problems. Consumer prices dropped by 0.1 per cent, which shows that people aren’t spending much money at home.

8. The real estate market is still struggling. Investment in property dropped by nearly 10 per cent compared to last year, even though the government is trying to help.

To boost domestic demand, China has rolled out a series of stimulus measures, including subsidies for appliance and car trade-ins, and more funding for housing and small businesses. Early results from these measures appear positive, with retail sales rising 4.2 per cent compared to the same period last year.

Still, economists remain cautious. UBS lowered its forecast for China’s 2025 growth to 3.4 per cent, citing the risk that exports to the U.S. could fall by two-thirds. The International Monetary Fund and Asian Development Bank remain more optimistic, maintaining growth forecasts of around 4.6 per cent for the year.

 (With AP inputs)