China is projected to report first-quarter economic growth of around 5% on Wednesday, lifted by a surge in exports ahead of impending U.S. tariff hikes but weighed down by weak domestic consumption, according to analysts.
The data will provide the first official snapshot of how escalating trade tensions with the United States are affecting China’s fragile recovery. President Joe Biden’s aggressive tariff stance—following former President Trump’s earlier moves—has led to U.S. levies on Chinese goods rising to 145%, with Beijing responding with 125% tariffs on U.S. imports.
Analysts surveyed by AFP forecast GDP growth of 5.1% for the January–March period, a dip from 5.4% in the previous quarter. March export figures, released Monday, showed a 12% year-on-year surge, which analysts attributed to “frontloading” by exporters racing to beat the April 2 implementation of new U.S. tariffs.
This export momentum likely boosted Q1 growth, but analysts caution that it may be a short-lived uptick in an otherwise challenging year for the world’s second-largest economy.
“China’s economy is facing pressure on multiple fronts,” said Sarah Tan, an economist at Moody’s Analytics. “The export bright spot is fading as U.S. tariffs take effect, while domestic demand remains sluggish amid elevated unemployment and a property sector still in correction.”
Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, noted that Q1 was “quite good” largely due to export frontloading and the seasonal boost from Lunar New Year spending. However, she warned that the second quarter “will be much worse.”
Beijing has introduced a series of stimulus measures, including interest rate cuts, easing homebuying restrictions, raising local government debt ceilings, and supporting financial markets. But confidence has waned as authorities have yet to outline a detailed stimulus package or define the scope of promised reforms.
Guo Shan, partner at Chinese consultancy Hutong Research, emphasized the importance of stabilizing the real estate sector, which now contributes around 6% to GDP. “If China could withstand its real estate adjustment over the past three years, it should be able to manage the impact of U.S. tariffs—especially if the sector stabilizes this year,” Guo said.
Further fiscal and monetary support is expected, with Tan anticipating more household-targeted stimulus and additional rate cuts from the People’s Bank of China.
In the longer term, China is aiming to make its economy more resilient by boosting domestic consumption and investing in strategic industries. But analysts warn that deepening trade rifts with the U.S. could threaten hundreds of billions of dollars in commerce, striking a major blow to an economy still struggling to generate internal momentum.
“Given these headwinds, there is significant downside risk to China’s GDP growth,” ANZ analysts wrote in a note. In a worst-case scenario, the economy could suffer a shock akin to the 2008 financial crisis, they added.
While Beijing has set a full-year growth target of around 5%, many economists believe that goal may be difficult to achieve under current conditions. As Guo put it, “Exports will decline, and investment may slow as companies become more cautious amid rising uncertainty.”