Beijing said on Wednesday the economy grew a forecast-beating 5.4 percent in the first quarter as exporters rushed to get goods out of factory gates ahead of swingeing new US tariffs.

Beijing and Washington are locked in a fast-moving, high-stakes game of brinkmanship since US President Donald Trump 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 US imports.

"At the moment, the imposition of high tariffs by the US will put certain pressures on our country's foreign trade and economy," said Sheng Laiyun, Deputy Commissioner of the National Bureau of Statistics.

China's GDP grew 5 percent year on year last year, and the country has set a full-year economic growth target of around 5 percent for 2025.

Retail sales, a key gauge of consumer demand, climbed 4.6 percent in the first quarter – rising 5.9 percent in March alone – while industrial output soared 6.5 percent, up from 5.7 percent in the final three months of 2024.

Noting the partial impact from front-loading by exporters, Louise Loo, lead economist at Oxford Economics, said the growth figure still indicated that the momentum has become more "organic" domestically, following a slate of policy stimulus from last year.

"If you look at components, household appliances, furniture, communication, equipment, all those have actually grown at a double-digit pace," she told RTHK.

"So we know that stimulus is working, and it's part of the reason why we have that strong retail spending.

"And if you look at sales of other items that were not supported by the government, it's still quite strong.

"So that gives us encouragement that perhaps the stimulus is not just working in the targeted segments that it wants to work, but it's also giving people the confidence to spend more on other areas as well," she said.

For his part, Xu Tianchen, a senior economist at the Economist Intelligence Unit who is based in Shanghai, said: "China normally has a tendency of having a high-flying first quarter growth, and then an underwhelming second quarter, that's the pattern."

He said that the country's growth in the second quarter might slow further, due to the additional "pains" caused by Trump's tariffs, which he said "is effectively causing an embargo on trade between the two nations".

"So there will be considerable pressures throughout the second and third quarters, which will then prompt government officials to offer more intervention and stimulus measures to keep the economy afloat," he told RTHK.

However, Xu struck a positive note, saying the economy can still hit its 5 percent growth target this year as Beijing still has a lot of fiscal "firepower" to prop up consumer spending and industrial growth.

"But it doesn't really matter whether China will hit its growth target or not as I think the key is to use the 5 percent growth target as a rallying call for the economy," he said.

"Ultimately, China needs to let its economy not be outstripped by the US, and that would be enough," Xu said.

Loo expects the economy to slow to a growth rate of 4 to 4.5 percent in the coming three quarters and that the country will miss its growth target for the year.

But she said the upcoming Communist Party Politburo meeting could offer clues to whether there are more measures on the way.

"It's really about designing the policy stimulus so that they would have an immediate impact on the economy," Loo said.

"And the type of stimulus that would have the most immediate impact would be consumption-oriented stimulus. So we should see more of that.

"[But] from a political standpoint, it might be, perhaps, more feasible to miss a growth target than to really back down on Trump's request," she said.

"I think President Xi Jinping could probably look at this and think 'we missed a growth target because of our external shock, but that was highly unanticipated'. Politically, I think missing the growth target is probably not such a bad outcome as it was before." (With contributions from AFP)
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Last updated: 2025-04-16 HKT 16:20