China GDP beats expectations in Q1 on stimulus boost; trade war impact looms

Published 16/04/2025, 03:14
© Reuters.

Investing.com-- China’s economy grew more than expected in the first quarter of 2025, gross domestic product data showed on Wednesday, benefiting from continued stimulus measures from Beijing. 

But quarter-on-quarter economic growth still missed expectations, as the Chinese economy began to feel the initial impact of a rapidly escalating trade war with the United States. 

GDP grew 5.4% year-on-year in the three months to March 31, government data showed. The print was higher than expectations of 5.2% and remained steady from the prior quarter. 

GDP grew 1.2% q-o-q, slightly missing estimates of 1.4% and slowing from the 1.6% rise in the prior quarter. 

The stronger GDP print was driven chiefly by sustained stimulus measures from Beijing, as the Chinese government ramped up both fiscal and monetary support for the economy. 

But China now faces dire economic headwinds from a bitter trade war with the U.S., with U.S. President Donald Trump recently imposing 145% tariffs on Chinese goods, drawing retaliatory levies of 125% from Beijing. 

Trump had in early-March imposed 20% tariffs on China, the impact of which was marginally felt on some export-heavy sectors. But data earlier this week showed Chinese exports soared in March, as foreign buyers ate the 20% tariffs to import more goods before Trump’s steeper tariffs took effect in April. 

Beijing is expected to drastically ramp up its stimulus support to offset the impact of Trump’s tariffs. But whether this will be successful will only show in GDP prints for the coming quarters.

The country was seen weakening the yuan to offset the impact of the U.S. trade war. Beijing was also seen promising more measures to boost consumer confidence and domestic spending. 

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