Jamie Spencer
China’s Strong Q1 Growth Defies Trade War Pressure
China’s economy grew 5.4% in the first quarter of 2025, surpassing the 5.1% growth forecast from a Reuters poll. The growth was fueled by strong industrial activity and exports, as well as government policies aimed at stimulating domestic demand.
Impact of U.S. Tariffs on Chinese Economy
Despite the strong performance, China’s growth was impacted by new tariffs imposed by the Trump administration. The U.S. introduced 20% tariffs on Chinese imports during the first quarter, with the total levies on Chinese goods now reaching up to 245%. Although key electronics were exempted, the trade war has had significant effects on China’s economy.
China’s Retaliation and Challenges Ahead
In retaliation, China has kept its tariffs on U.S. goods at 125% and restricted the export of rare earth minerals critical for defense technologies, medical treatments, and electronics. Despite these measures, analysts predict a slowdown in China’s growth for the current quarter due to the escalating trade war.
Forecasts for China’s Economy in 2025
UBS downgraded China’s 2025 growth forecast to 3.4%, citing the impact of ongoing tariff hikes and the challenges of shifting from export-driven to domestic demand. The U.S. tariffs are expected to reduce external demand sharply, putting downward pressure on domestic prices.
WTO Complaints and New Trade Envoy
Amid growing tensions, China has filed several complaints with the World Trade Organization (WTO) and appointed a new trade envoy, Li Chenggang, to handle its trade relations. Analysts remain uncertain about the future trajectory of the U.S.-China trade war and its broader economic implications.
