The article reports that China’s economy saw a 5.4% growth in the first quarter of the year, driven by producers increasing exports ahead of impending higher tariffs imposed by U.S. President Donald Trump, as indicated by official data. This GDP growth marks China’s first since the initiation of Trump’s trade war, which poses a risk of a complete decoupling between the U.S. and China at a time when Chinese households are already dealing with the impacts of a significant property market slowdown.
The growth rate matches China’s growth in the previous quarter and surpasses both Beijing’s target for 2025 and the 5.1% predicted by analysts in a Reuters survey. Beijing has aimed for a 5% growth this year and plans to support this goal with increased stimulus measures, including a record budget deficit target for the central government.
Despite these measures, private-sector economists have lowered their growth forecasts due to the trade war, with Morgan Stanley reducing its prediction for China’s GDP growth from 4.5% to 4.2% for the year. Trump’s tariffs on Chinese goods have reached an additional 145%, with certain goods like smartphones and electronics receiving temporary exemptions.
UBS reported that almost 60% of U.S. imports from China are subject to the maximum 145% tariff, while the remainder are facing tariff increases of 20-45% as of last week. In response, China has implemented retaliatory tariffs of 125%, potentially leading to a severe decoupling of the world’s two largest economies.
