Financial News: China Economic Growth Beats Expectations

China Economic Growth Beats Expectations

(RTTNews) - China's economy logged stronger-than-expected growth in the first quarter as fiscal support helped to boost domestic demand but escalating trade tensions pose significant challenges to its growth prospects.

Gross domestic product grew 5.4 percent year-on-year, data published by the National Bureau of Statistics revealed on Wednesday. This was better than economists' forecast of 5.1 percent and remained unchanged from the previous quarter. Quarter-on-quarter, the economy grew 1.2 percent in the first quarter but weaker than the expected growth of 1.4 percent.

In March, retail sales increased at a faster pace of 5.9 percent from the previous year after rising 4.0 percent in the January to February period. Economists had forecast sales to climb 4.2 percent.

Industrial production growth accelerated to 7.7 percent from 5.9 percent in the first two months of 2025, while it was expected to slow to 5.7 percent.

Fixed asset investment increased 4.2 percent in the first quarter, slightly faster than the 4.1 percent rise in January to February. Economists had forecast an expansion of 4.1 percent. However, property investment continued to fall in the first quarter. Investment slid 9.9 percent after falling 9.8 percent in the January to February period.

The urban jobless rate dropped to 5.2 percent in March from 5.4 percent in February. The rate was also below economists' forecast of 5.3 percent. Although fiscal support helped the first quarter growth to beat expectations, this was not enough to deliver faster growth over the quarter as a whole, Capital Economics economist Zichun Huang said.

However, the hit from US tariffs means the rest of the year will undoubtedly be weaker. But domestic policy support is likely to prevent growth from falling below 4.0 percent this year, the economist added.

Beijing aims to achieve growth of "around 5 percent" this year. The International Monetary Fund forecast China to expand 4.6 percent in 2025.

ING economist Lynn Song said tariff headwinds will likely necessitate more monetary and fiscal easing. Song expects China to take additional measures to meet this year's growth target.

The US administration has so far imposed 145 percent tariffs on China and the latter has retaliated with 125 percent levies on US goods.

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