<\/p>\n
Beijing has put boosting consumption as the top priority this year as they try to cushion the impact of the Trump administration\u2019s tariffs on its trade sector.<\/p>\n
China\u2019s first-quarter economic growth outstripped expectations, underpinned by solid consumption and industrial output, but analysts fear momentum could shift sharply lower as US tariffs pose the biggest risk to the Asian powerhouse in decades.<\/p>\n
President Donald Trump has ratcheted up tariffs on Chinese goods to eye-watering levels, prompting Beijing to slap retaliatory duties on US imports that have raised the stakes for the world\u2019s two biggest economies and rattled financial markets.<\/p>\n
Data on Wednesday (Apr 16) showed China\u2019s gross domestic product (GDP) grew 5.4 per cent in the January-to-March quarter from a year earlier, unchanged from the fourth quarter, but surpassed analysts\u2019 expectations in a Reuters poll for a rise of 5.1 per cent.<\/p>\n
Growth momentum is expected to cool sharply in the next few quarters, however, as Washington\u2019s tariff shock hits the crucial export engine, heaping pressure on Chinese leaders to roll out more support measures to keep the world\u2019s second-largest economy on an even keel.<\/p>\n
\u201cChina\u2019s economy faces two material drags simultaneously: the ongoing property fallout internally and the unprecedented US-China trade war externally,\u201d Nomura economists said.<\/p>\n
While government stimulus boosted consumption and supported investment, Xu Tianchen, senior economist at the Economist Intelligence Unit, said that \u201ca forceful and timely policy response\u201d is needed given the additional pressure stemming from US tariffs.<\/p>\n
Exports have remained a lone bright spot in China\u2019s economy, with a trillion-US dollar trade surplus last year helping to underpin growth even as a prolonged property sector slump and sluggish domestic demand continue to undercut a solid recovery.<\/p>\n
That complicates the policy challenge for Beijing as Trump\u2019s relentless focus on China\u2019s vast trade engine threatens to choke off a key growth driver.<\/p>\n
China\u2019s Premier Li Qiang said this week the country\u2019s exporters will have to cope with \u201cprofound\u201d external changes, and vowed to support more domestic consumption.<\/p>\n
Indeed, quarter-on-quarter momentum highlighted a softer underbelly, with the economy expanding 1.2 per cent in the first quarter, slowing from 1.6 per cent in October-to-December period.<\/p>\n
For 2025, the economy is expected to grow at a subdued 4.5 per cent pace year on year, the Reuters poll showed, slowing from last year\u2019s 5 per cent pace and falling short of the official target of around 5 per cent. Global investment banks have sharply slashed their China GDP forecasts for this year.<\/p>\n
Citing the punitive US duties, ANZ on Wednesday cut its China 2025 GDP forecast to 4.2 per cent from 4.8 per cent, while Nomura reduced theirs to 4 per cent from 4.5 per cent.<\/p>\n
UBS was even more pessimistic, having this week downgraded its 2025 growth forecast for the Asian giant to 3.4 per cent from 4 per cent, on the assumption that Sino-US tariff hikes will remain in place and that Beijing will roll out additional stimulus.<\/p>\n
\u201cWe think the tariff shock poses unprecedented challenges to China\u2019s exports and will set forth major adjustment in the domestic economy as well,\u201d UBS analysts said in a note.<\/p>\n
While several other countries have been swept up in US tariffs, Trump has targeted China for the biggest levies to the tune of 145 per cent. Dismissing US trade actions as \u201ca joke\u201d, Beijing has hit back with 125 per cent duties on US goods.<\/p>\n
The spiralling trade war with the US took some of the shine off brighter notes in separate data.<\/p>\n
Retail sales, a key gauge of consumption, rose 5.9 per cent year on year in March after gaining 4 per cent in January-to-February period, while factory output growth quickened to 7.7 per cent from 5.9 per cent in the first two months. Both numbers topped analysts\u2019 forecasts.<\/p>\n
The retail sales uptick was driven by sharp double-digit gains in home electronics and furniture sales, helped by the government\u2019s consumer goods trade-in scheme.<\/p>\n
But China\u2019s property downturn remained a drag on overall growth, with investment in the sector falling 9.9 per cent year on year in the first three months. March new home prices were unchanged on month.<\/p>\n
The broader impulse from Wednesday\u2019s data still pointed to an uneven economic recovery, particularly as elevated unemployment and persistent deflationary pressures fuel concerns over weak demand.<\/p>\n
\u201cGood GDP does not represent the overall economic health of an economy,\u201d said Raymond Yeung, chief China economist at ANZ. \u201cDeflation and youth unemployment remain the primary concerns.\u201d<\/p>\n
Moreover, analysts say a surge in China\u2019s March exports \u2013 driven by factories rushing shipments to beat the latest Trump tariffs \u2013 will reverse sharply in the months ahead as the hefty US levies take effect.<\/p>\n
Policymakers have repeatedly said the country has ample room and tools to bolster the economy, and analysts expect further support measures in coming months following a blitz of monetary easing steps late last year.<\/p>\n
Earlier this month, Fitch downgraded China\u2019s sovereign credit rating, citing rapidly rising government debt and risks to public finances, suggesting a tricky balancing act for policymakers seeking to expand consumption to guard against a trade downturn.<\/p>\n
\u201cThe current situation is similar to the negative shocks China experienced in the past, such as the Covid-19 outbreak in 2020 and the global financial crisis in 2008,\u201d ANZ\u2019s Yeung said. \u201cWe see limited options for Chinese authorities against the tariff shock except a large fiscal expansion.\u201d<\/p>\n
<\/p>","protected":false},"excerpt":{"rendered":"
Beijing has put boosting consumption as the top priority this year as they try to cushion the impact of the Trump administration\u2019s tariffs on its trade sector. China\u2019s first-quarter economic growth outstripped expectations, underpinned by solid consumption and industrial output, but analysts fear momentum could shift sharply lower as US tariffs pose the biggest risk […]<\/p>\n","protected":false},"author":1,"featured_media":3809,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3808","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bez-rubriki"],"featured_image_src":{"landsacpe":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2025\/04\/Beijing-65-1140x445.webp",1140,445,true],"list":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2025\/04\/Beijing-65-463x348.webp",463,348,true],"medium":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2025\/04\/Beijing-65-300x201.webp",300,201,true],"full":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2025\/04\/Beijing-65.webp",1600,1071,false]},"_links":{"self":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/3808","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/comments?post=3808"}],"version-history":[{"count":1,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/3808\/revisions"}],"predecessor-version":[{"id":3810,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/3808\/revisions\/3810"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/media\/3809"}],"wp:attachment":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/media?parent=3808"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/categories?post=3808"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/tags?post=3808"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}