China's Q1 GDP Exceeds Expectations at 5.4% Amid U.S. Tariff Concerns

China's economy grew 5.4% year-on-year in the first quarter of 2025, surpassing expectations and the government's annual growth target of around 5%. Data released by the National Bureau of Statistics showed that the gross domestic product reached 31.88 trillion yuan (approximately $4.37 trillion). The stronger-than-expected growth was bolstered by robust industrial output and retail sales in March. Industrial production increased by 7.7% year-on-year, exceeding the forecasted 5.9%, while retail sales rose by 5.9%, beating expectations of a 4.3% increase. Analysts attribute this surge to businesses accelerating shipments ahead of impending U.S. tariff hikes. Despite the positive performance in the first quarter, concerns are mounting over the impact of escalating trade tensions between China and the United States. UBS has downgraded its 2025 GDP growth forecast for China to 3.4%, citing the effects of U.S. tariffs on Chinese exports. Other financial institutions, including ANZ and Nomura, have also lowered their growth projections for China. Chinese officials acknowledged that higher U.S. tariffs would exert some pressure on the country's trade and economy in the short term. However, they emphasized that these challenges would not alter the long-term positive trajectory of China's economic development. The National Bureau of Statistics expressed confidence in the resilience of the Chinese economy and its ability to maintain steady growth despite external pressures.