China’s Q1 2025 GDP Beats Forecasts Despite Trade War Pressures

China’s economy expanded more than expected in the first quarter of 2025, with GDP growing 5.4% year-on-year, surpassing market forecasts of 5.2%, according to official data released Wednesday. The stronger performance was largely driven by continued fiscal and monetary stimulus from Beijing aimed at bolstering growth. However, quarter-on-quarter growth slowed to 1.2%, missing estimates of 1.4% and down from 1.6% in the previous quarter, highlighting early signs of strain from rising trade tensions with the U.S.

The year-on-year growth stability underscores Beijing’s aggressive support strategies, which include increased infrastructure spending and looser credit policies. But the Chinese economy now faces intensifying pressure as the trade war with the United States escalates. U.S. President Donald Trump recently raised tariffs on Chinese goods to 145%, prompting Beijing to retaliate with 125% levies on American imports.

Trump’s initial 20% tariffs in March had a limited impact, but exporters rushed shipments ahead of April’s steeper duties, leading to a temporary spike in exports last month. Economists warn that the full brunt of the tariffs will likely emerge in future economic reports, putting Beijing’s stimulus measures to the test.

In response to the growing economic headwinds, China is reportedly considering further stimulus, including a potential devaluation of the yuan to maintain export competitiveness. Authorities are also expected to introduce new initiatives aimed at boosting domestic consumption and restoring consumer confidence amid uncertainty.

While Q1’s strong GDP figure offers some reassurance, the outlook for China’s economy remains uncertain as global trade conditions worsen. Markets will closely watch upcoming data to assess the effectiveness of Beijing’s countermeasures and the broader impact of the U.S.-China trade war on long-term growth.