China's economy grew 5.4% in the first quarter as exporters rushed to
beat Trump's tariffs
[April 16, 2025] By
ELAINE KURTENBACH
BANGKOK (AP) — China's economy expanded at a 5.4% annual pace in
January-March, the government said Wednesday, supported by strong
exports ahead of U.S. President Donald Trump’s rapid increases in
tariffs on Chinese products.
With the trade war clouding the outlook, analysts are forecasting that
the world’s second largest economy will slow significantly in coming
months, however, as tariffs as high as 145% on U.S. imports from China
take effect. Beijing has hit back at the U.S. with 125% tariffs on
American exports, while also stressing its determination to keep its own
markets open to trade and investment.
Chinese leader Xi Jinping's visits is visiting several other Asian
countries this week as he makes a case for free trade, presenting China
as a source of “stability and certainty” in uncertain times.
Xi was visiting Vietnam, Malaysia, and Cambodia, while the U.S.
announced that a senior State Department official, Sean O’Neill, would
be traveling this week to Vietnam's capital Hanoi and to Ho Chi Minh
City, to Cambodia's Siem Reap and to Tokyo.
China also has been highlighting its focus on trade with countries other
than the United States at various trade fairs that are showcasing its
vast market and competitiveness as a manufacturing giant.
At China’s Canton trade fair, in the southern city of Guangzhou,
exporters were emphatic about the need to look beyond selling to
Americans.
“We need to diversify our market. When the West is dark, the East is
bright. The global market is huge,” said Wallace Huang, the export
business director of Guangdong Weking Group, which makes rice cookers.
“In recent years, our exports to the U.S. have slowly been declining.”
The trade factor
Exports helped China's economy expand at a 5% annual rate in 2024 and
this year's official target is about 5%.
In the near term, the tariffs will put pressure on China's economy, but
they won't derail long-run growth, Sheng Laiyun, a spokesperson for the
National Bureau of Statistics, told reporters. He noted that China's
exports to the United States have fallen to less than 15% of total
exports from more than 19% five years ago.
“China’s economic foundation is stable, resilient and has great
potential. We have the confidence, ability and confidence to cope with
external challenges and achieve our established development goals,”
Sheng said.
In quarterly terms the economy grew 1.2% in January-March, slowing from
1.6% in the last quarter of 2024.
Chinese exports surged more than 12% from a year earlier in March and
nearly 6% in U.S. dollar terms in the first quarter, as companies rushed
to beat Trump’s tariffs. That has supported robust manufacturing
activity in the past several months.
China's industrial production rose 6.5% from a year earlier in the last
quarter, led by a nearly 11% increase in output of equipment
manufacturing.
[to top of second column] |
Wallace Huang, export business director of Weking, talks about the
Chinese manufacturer of rice cookers and heaters at the 137th Canton
Fair in Guangzhou in southern China's Guangdong province on
Wednesday, April 16, 2025. (AP Photo/Ng Han Guan)
 The strongest growth was in advanced
technologies, such as production of battery electric and hybrid
vehicles, which jumped 45.4% year-on-year. Output of 3D printers
soared almost 45% and of industrial robots surged 26%.
Weaker property investment and consumer prices
Despite relatively fast growth by global standards, the Chinese
economy has struggled to regain momentum since the COVID-19 pandemic
as downturn in the property market has pushed unemployment higher,
leaving families wary about spending.
Consumer prices fell 0.1% in the first quarter, suggesting that
demand is not keeping up with supply for many industries. Investment
in real estate also remained weak, falling nearly 10% from a year
earlier despite government efforts to spur more lending for housing
purchases.
The tariffs crisis looms as another massive blow at a time when
Beijing is striving to get businesses to invest and hire more
workers and to persuade Chinese consumers to spend more.
The outlook
Both private and public sector economists have remained cautious
about what to expect, given how Trump has kept switching his stance
on the details of his trade war.
“Given the events over the past two weeks, it is extremely difficult
to predict how the U.S. and China tariffs on each other might
evolve,” Tao Wang and other UBS economists said in a report.
The International Monetary Fund and Asian Development Bank have
stuck with more optimistic forecasts of about 4.6% growth this year.
After taking office, Trump first ordered a 10% increase in tariffs
on imports from China. He later raised that to 20%. Now, China is
facing 145% tariffs on most of its exports to the United States.
UBS estimates that the tariffs, if they remain roughly as they are,
could cause China’s exports to the United States to fall by
two-thirds in coming months and that its global exports could fall
by 10% in dollar value. It cut its forecast for economic growth this
year to 3.4% from an earlier 4%. It expects growth to slow to 3% in
2026.
China has stepped up efforts to spur more consumer spending and
private sector investment over the past seven months, doubling down
on subsidies for auto and appliance trade-ins and channeling more
funding for housing and other cash strapped industries.
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AP researchers Yu Bing and Shihuan Chen contributed.
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