Beijing and Washington are locked in a fast-moving, high-stakes game of brinkmanship since the US president launched a global tariff assault that has particularly targeted Chinese imports.
Tit-for-tat exchanges have seen US levies imposed on China rise to 145 percent, and Beijing setting a retaliatory 125 percent toll on imports from America.
Official data Wednesday offered a first glimpse into how those trade war fears are affecting the Asian giant's fragile recovery, which was already feeling the pressure of persistently low consumption and a property market debt crisis.
"At the moment, the imposition of high tariffs by the US will put certain pressures on our country's foreign trade and economy," Sheng Laiyun, Deputy Commissioner of the National Bureau of Statistics (NBS), told a news conference.
But, he said, "it will not change the general trend of China's economy continuing to improve in the long run".
The NBS said that "according to preliminary estimates, the gross domestic product in the first quarter... (was) up by 5.4 percent year on year at constant prices".
That was above the 5.1 percent predicted by analysts polled by AFP.
Retail sales, a key gauge of consumer demand, climbed 4.6 percent year-on-year, the NBS said, while industrial output soared 6.5 percent in the first quarter of the year, up from 5.7 percent in the final three months of 2024.
But Beijing warned the global economic environment was becoming more "complex and severe" and that more was needed to boost growth and consumption.
"The foundation for sustained economic recovery and growth is yet to be consolidated," the NBS said, adding there was a need for "more proactive and effective macro policies".
Figures released Monday showed Beijing's exports soared more than 12 percent on-year in March, smashing expectations, with analysts attributing it to a "front-loading" of orders ahead of Trump's so-called "Liberation Day" tariffs on April 2.
- 'Front-loaded' growth -
Observers say recent data will likely be overshadowed by more grim figures further down the line as tariffs begin to bite.
"The damage from the trade war will show up in the macro data next month," Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management, said in a note.
Steve Innes at SPI Asset Management said the figures "might look like a win on the surface, but let's not pretend this caught anyone off guard".
"Much of this was front-loaded -- fueled by a burst of preemptive activity ahead of US tariff escalations and an inventory binge stateside as importers scrambled to get ahead of the curve," he wrote.
Trump said this week that the "ball is in China's court" when it comes to drawing down those eye-watering tariffs.
China's economy, the world's second-largest, was already struggling to rebound from a pandemic-induced slowdown, with the double-digit growth that fuelled its rise now a distant memory.
Beijing in 2024 announced a string of aggressive measures to reignite the economy, including interest rate cuts, cancelling restrictions on homebuying, hiking the debt ceiling for local governments and bolstering support for financial markets.
But after a blistering market rally last year fuelled by hopes for a long-awaited "bazooka stimulus", optimism waned as authorities refrained from providing a specific figure for the bailout or fleshing out any of the pledges.
China's top leaders last month set an ambitious annual growth target of around five percent, vowing to make domestic demand its main economic driver.
Many economists consider that goal to be ambitious given the problems facing the economy.
But Beijing on Wednesday stressed it believed that target was achievable.
"We have the strength, capability and confidence to face external challenges and achieve our set development goals," the NBS's Sheng said.
China's forecast-beating growth belies storm clouds ahead: analysts
Beijing (AFP) April 16, 2025 -
Forecast-beating growth in China's first quarter may have offered Beijing's economic planners some much needed good news -- but analysts warn they should strap in for tariff-induced woes further down the line.
The National Bureau of Statistics said Wednesday the world's number-two economy expanded 5.4 percent on-year in January-March, helped by a surge in exports.
However, observers said the bulk of that came from "frontloading" as business rushed to ship goods out of the factory before Donald Trump's trade blitz kicked in.
And while state efforts to boost lagging consumption -- for months a drag on growth -- played a role in the growth boost, the outlook remained uncertain.
"It's too early to interpret this strength as a sign of lasting market recovery," Yue Su at the Economist Intelligence Unit told AFP.
"The strong performance has been driven by trade frontloading ahead of anticipated tariffs and a policy-driven rebound in consumption -- particularly in electronics and home appliances," she added.
Tit-for-tat exchanges have seen US levies imposed on China rise to 145 percent, and Beijing setting a retaliatory 125 percent toll on imports from America.
Trump has said the ball is in China's court if it wants to find a way out and Beijing has, in turn, vowed to "fight to the end" in a trade war that shows few signs of letting up.
But Beijing's gung-ho rhetoric belies deep concerns about the impact that Trump's tariffs could have on the deeply export-dependent Chinese economy.
"The escalation happening in April is going to be felt in the second-quarter figures as the tariffs will send stateside firms looking to other suppliers, impeding Chinese exports and slamming the brakes on investment," Heron Lim, an economist at Moody's Analytics, told AFP.
"This will hit electronics makers and exporters the hardest, as their products dominate China's US-bound exports," he said.
And Louise Loo at Oxford Economics warned that "the improvement in growth momentum is very likely to be short-circuited in the coming months by the incoming headwinds of punitive tariffs".
- More macro please -
China on Wednesday admitted that the global economy was becoming more "complex and severe" -- and that tariffs were putting "pressure" on trade.
A top economic planner also stressed that more "proactive and effective macro policies" would be needed to boost growth.
Beijing last year announced a string of aggressive measures to reignite the economy, including interest rate cuts, cancelling restrictions on homebuying, hiking the debt ceiling for local governments and bolstering support for financial markets.
After a blistering market rally fuelled by hopes for a long-awaited "bazooka stimulus", optimism waned as authorities refrained from providing a specific figure for the bailout or fleshing out any of the pledges.
But as a potentially crippling trade war looms, analysts agree that Beijing may finally feel pressed to do more to boost domestic spending and tariff-proof the economy.
A debt crisis in the property sector -- long a major drag on broader consumer sentiment -- remains a crucial handicap for the economy.
"Throwing the domestic economy a lifeline is more important than ever before," Sarah Tan of Moody's Analytics said.
"The cratering property market remains front and centre of households' concerns," she added.
"Combined with the shaky labour market, falling house prices are giving households good reason to prioritise saving over spending."
Insights into how that stimulus could work could emerge from an expected meeting of China's Politburo, its ruling party Communist Party's top decision-making body.
"We continue to anticipate a $2 trillion stimulus package focused on consumption, infrastructure, urban renewal, and shantytown renovation," said Su at the Economist Intelligence Unit.
"Challenges to China's economy remain significant over the coming quarters."
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