China’s economy kicked off 2025 with a 5.4% annual growth rate, driven largely by a surge in exports as companies raced to get ahead of massive new U.S. tariffs. But analysts warn that the pace may not last long.
Export Boom Before the Storm
In the first quarter, Chinese exports jumped more than 12% year-over-year in March alone, with overall export growth reaching nearly 6% in dollar terms. Manufacturers pushed production into overdrive to ship goods before U.S. tariffs — now reaching as high as 145% — took effect under President Donald Trump’s latest trade moves.
This export burst boosted industrial output, which rose 6.5% in Q1. Equipment manufacturing saw an 11% jump, and high-tech sectors like electric vehicles and hybrid production soared 45.4%. Output of 3D printers and industrial robots also surged, rising 45% and 26% respectively.
“Much of this was front-loaded,” noted Stephen Innes of SPI Asset Management, citing an inventory build-up in the U.S. and pre-tariff urgency in China’s factories.
Tariff Tensions and Domestic Strains
Still, headwinds are mounting. The quarterly growth rate slowed to 1.2%, down from 1.6% in the last quarter of 2024. And while exports offered a short-term lift, the longer-term picture is clouded by trade friction and a sluggish domestic economy.
China responded to U.S. tariffs with 125% duties on American imports. But even with this tit-for-tat approach, officials emphasized a commitment to open markets. “China’s economic foundation is stable, resilient and has great potential,” said Sheng Laiyun of the National Bureau of Statistics.
Consumer demand, however, remains weak. Prices fell 0.1% in Q1, and real estate investment dropped nearly 10% despite policy support. Beijing has tried to offset the drag with stimulus measures, including subsidies for auto and appliance trade-ins and increased funding for housing.
Uncertain Outlook
Economists are split on what lies ahead. UBS cut its full-year forecast to 3.4%, citing the risk that U.S. tariffs could slash China’s exports to the U.S. by two-thirds and global exports by 10%. It sees growth slowing further to 3% by 2026.
Meanwhile, global institutions like the IMF and ADB remain more upbeat, holding to estimates around 4.6% growth for the year. Retail sales climbed 4.2% year-on-year, a sign that Beijing’s push to boost consumption might be gaining some traction.
But with Trump’s shifting trade policy and lingering post-COVID challenges, the road ahead for the world’s second-largest economy remains anything but predictable.