China's economy grew by 5.4% year-over-year in the first quarter of 2025, surpassing expectations. This growth was driven by strong industrial production, infrastructure investment, and a surge in exports ahead of newly imposed U.S. tariffs. However, escalating trade tensions, including U.S. tariffs reaching up to 145% and China's retaliatory tariffs of 125%, are expected to slow China's economic growth in the coming quarters. Analysts have downgraded China's full-year growth forecasts, with UBS projecting a decline to 3.4%, citing significant challenges to exports and overall economic stability. In response, Beijing is implementing stimulus measures, such as infrastructure spending and consumer incentives, to bolster domestic demand amidst a prolonged property slump and weak consumer confidence.
https://www.cnbc.com/2025/04/16/chinas-first-quarter-gdp-growth-at-as-trade-war-heats-up.html
3 comments:
China's 5.4% Q1 may be heavily propped up by pre-tariff export rushing and infrastructure spending, hinting at weaker domestic demand. The case was similar for recent numbers released in the US. It will be interesting to see what Q2 numbers come in at in a few months time.
I am more interested to see what will happen in the next months. I have seen numbers and analysis in terms of the incoming trade war and while we can agree that it will hurt American consumers, I think there is a fair amount of evidence pointing to the conclusion that it could devastate China.
This is a prime example of how consumer expectations influence the market in such a dominant way. I think that the precautions that China is taking to stimulate their economy is a smart way to combat how these tariffs might impact their economy.
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