China's economy grew 5.4% in the first quarter of 2025, outpacing expectations and continuing the recovery momentum that began late last year. The strong showing comes despite mounting concerns over heightened global trade tensions and new U.S. tariffs that have prompted downward revisions to the country's full-year growth outlook.
The latest figures indicate that China's policy stimulus measures are continuing to support activity, particularly in consumption and industrial output. March retail sales rose 5.9% year-on-year, while industrial production grew by 7.7%—both significantly above market forecasts. Fixed asset investment climbed 4.2% in the first quarter, although property investment remained a drag, falling 9.9% from a year earlier. Infrastructure and manufacturing investment, however, showed notable gains.
Urban unemployment eased to 5.2% in March after hitting a two-year high of 5.4% in February, suggesting modest labor market improvement.
According to the National Statistics Agency, the economy had "a good and stable start" to the year, with innovation increasingly driving growth. The statement referenced the development of advanced technologies, including notable breakthroughs in artificial intelligence announced by domestic firms earlier this year.
Despite the positive indicators, officials cautioned that external challenges remain significant. The global economic environment is becoming "more complex and severe," and domestic demand has yet to recover fully. Authorities emphasized the need for more proactive and targeted macroeconomic policies to bolster internal growth and address global uncertainties.
China has set an annual GDP growth target of "around 5%" for 2025, a goal that many observers believe may prove challenging to meet amid intensifying economic friction with the United States and weakening global demand. The ongoing tariff standoff—characterized by tit-for-tat hikes—has now resulted in total duties of 145% on Chinese goods entering the U.S., with Beijing responding by raising tariffs on American products to 125%.
Recent trade data shows a declining share of exports to the U.S., dropping from 19.2% in 2018 to 14.7% in 2024. While March figures remained robust, some high-frequency indicators suggest that exports have since slowed considerably, particularly in sectors exposed to U.S. demand.
Analysts widely anticipate that second-quarter growth may decelerate sharply due to the trade headwinds, with limited likelihood of a near-term resolution to the tariff conflict. The economic impact of reduced exports and delayed capital expenditure is expected to become more evident in the months ahead.
Various economic institutions have lowered growth forecasts for the year. Some now expect China's GDP to expand by closer to 3.5% in 2025, assuming no substantial easing of trade tensions. Export volumes, particularly to the U.S., are projected to decline significantly, dragging down overall trade performance.
In light of the challenging external environment, policymakers are expected to deploy additional stimulus measures, which may include a further reduction in the reserve requirement ratio for banks, interest rate cuts, and increased issuance of infrastructure bonds to support local development projects. Authorities may also expand subsidy programs to promote household consumption—such as trade-in schemes for durable goods—and encourage local governments to reduce excess housing inventory.
Additional fiscal support measures worth between 1 trillion and 1.5 trillion yuan are reportedly under consideration for the second half of the year, aimed at softening the impact of external shocks and reinforcing domestic growth drivers.
Speaking after the GDP data release, a senior official from the National Statistics Bureau acknowledged rising global protectionism and stressed the importance of strengthening internal economic resilience. The official cited China's experience in weathering past crises—including the pandemic and prior trade disputes—as a source of confidence in the country's ability to adapt.
While current trade tensions are likely to put pressure on export performance, authorities reaffirmed that China's economy remains fundamentally resilient and well-positioned to pursue stable, high-quality development over the longer term. Further policy announcements are expected in the coming weeks as part of the government's efforts to sustain momentum and support domestic demand.