Overview

• China's economy grew 5.4% year-on-year in Q1 2025, exceeding the 5.2% forecast, with 1.2% quarter-on-quarter growth reported.
• Retail sales rose 4.6% and industrial output increased by 6.5%, both surpassing expectations, while the trade surplus exceeded $270 billion.
• Analysts attribute the strong Q1 performance to businesses and consumers accelerating purchases ahead of steep US tariffs imposed by President Trump.
• US-China trade tensions have escalated, with US tariffs on Chinese goods reaching 145% and China's retaliatory duties at 125%, prompting export diversification to markets like Southeast Asia, Africa, and India.
• Chinese officials have pledged more proactive macroeconomic policies to support domestic demand, as full-year growth forecasts are revised down to 4.5%, below the government's 5% target.