BANGKOK (AP) — China’s economy expanded at a 5.4 per cent annual pace in January-March, supported by strong exports ahead of US President Donald Trump’s rapid increases in tariffs on Chinese exports, the government said Wednesday.
Analysts are forecasting that the world’s second largest economy will slow significantly in coming months, however, as tariffs as high as 145 per cent on US imports from China take effect.
Exports were a strong factor in China’s ability to attain a 5 per cent annual growth rate in 2024 and the official target for this year remains at about 5 per cent.
Beijing has hit back at the US with 125 per cent tariffs on American exports, while also stressing its determination to keep its own markets open to trade and investment.
In the near term, the tariffs will put pressure on China’s economy, but they won’t derail long-run growth, Sheng Laiyun, a spokesperson for the National Bureau of Statistics, told reporters.
“China’s economic foundation is stable, resilient and has great potential. We have the confidence, ability and confidence to cope with external challenges and achieve our established development goals,” Sheng said.
In quarterly terms the economy grew 1.2 per cent in January-March, slowing from 1.6 per cent in the last quarter of 2024.
Chinese exports surged more than 12 per cent from a year earlier in March and nearly 6 per cent in US dollar terms in the first quarter, as companies rushed to beat Trump’s tariffs. That has supported robust manufacturing activity in the past several months.
“Much of this was front-loaded — fueled by a burst of preemptive activity ahead of US tariff escalations and an inventory binge stateside as importers scrambled to get ahead of the curve,” Stephen Innes of SPI Asset Management said in a commentary.
Industrial production rose 6.5% from a year earlier in the last quarter, led by a nearly 11 per cent increase in output of equipment manufacturing.
The strongest growth was in advanced technologies, such as production of battery electric and hybrid vehicles, which jumped 45.4 per cent year-on-year. Output of 3D printers soared almost 45 per cent and of industrial robots surged 26 per cent.
But despite relatively fast growth by global standards, the Chinese economy has struggled to regain momentum since the COVID-19 pandemic, partly due to a downturn in the property market resulting from a crackdown on excess borrowing by developers.
Consumer prices fell 0.1 per cent in the first quarter, suggesting that demand is not keeping up with supply for many industries. Investment in real estate also remained weak, falling nearly 10 per cent from a year earlier despite government efforts to spur more lending for housing purchases.
The tariffs crisis looms as another massive blow at a time when Beijing is striving to get businesses to invest and hire more workers and to persuade Chinese consumers to spend more.
Those efforts appear to be bearing fruit. Retail sales rose 4.2 per cent from a year earlier
Both private and public sector economists have remained cautious about what to expect, given how Trump has kept switching his stance on the details of his trade war.
“Given the events over the past two weeks, it is extremely difficult to predict how the US and China tariffs on each other might evolve,” Tao Wang and other UBS economists said in a report.
The International Monetary Fund and Asian Development Bank have stuck with more optimistic forecasts of about 4.6 per cent growth this year.
After taking office, Trump first ordered a 10 per cent increase in tariffs on imports from China. He later raised that to 20 per cent. Now, China is facing 145 per cent tariffs on most of its exports to the United States.
UBS estimates that the tariffs, if they remain roughly as they are, could cause China’s exports to the United States to fall by two-thirds in coming months and that its global exports could fall by 10 per cent in dollar value. It cut its forecast for economic growth this year to 3.4 per cent from an earlier 4 per cent. It expects growth to slow to 3 per cent in 2026.
China has stepped up efforts to spur more consumer spending and private sector investment over the past seven months, doubling down on subsidies for auto and appliance trade-ins and channeling more funding for housing and other cash strapped industries.
