China’s GDP Surges 5.4% in Q1, Amid Escalating Trade War With the U.S.

China’s economy achieved a remarkable 5.4% growth in the first quarter of 2025, surpassing analyst forecasts and showcasing resilience despite global headwinds.

The National Bureau of Statistics of China reported that industrial output spearheaded this expansion, surging by 6.5%, the highest increase among all sectors.

The service sector also contributed significantly, growing by 5.3%, while retail sales and agricultural production rose by 4.6% and 4.0%, respectively.

The statistics agency hailed this performance as a “good start,” emphasizing that high-quality development gained new momentum in the first quarter.

However, the agency cautioned that a “more complex and severe” external environment threatens China’s economic stability, with the foundation for sustained recovery still unconsolidated.

Central to these challenges is the intensifying US-China trade war, as President Donald Trump imposed a 145% tariff on Chinese goods, targeting key exports like semiconductors and critical minerals.

China retaliated swiftly, levying a 125% duty on US products and vowing to “fight to the end” if trade hostilities escalate further.

Alicia García-Herrero, chief economist for Asia Pacific at Natixis, noted that the strong Q1 figures were largely export-driven, warning that trade tensions could drag down growth in the second quarter.

Lynn Song, chief economist for Greater China at ING, predicted that Beijing will likely deploy additional monetary and fiscal stimulus to secure its 2025 growth target of approximately 5%.

The economic data, released on Wednesday by the National Bureau of Statistics, underscores both the robustness and vulnerability of China’s economy amid an increasingly volatile global landscape.

As the world’s two largest economies clash, the ripple effects of this trade war threaten to reshape global supply chains and economic forecasts for 2025.

Subscribe to Notifications