Editorial | China’s domestic demand is a key weapon in fight against Trump tariffs
First-quarter GDP growth beat expectations, but in longer term, China must boost local economy and forge new trade deals around the world
China’s economy beat expectations with strong growth in the first quarter of the year, coming in comfortably ahead of the annual target and allowing officials to breathe a sigh of relief.
Any mood for celebration, however, will be short-lived. The country has yet to feel the full impact of the all-out trade war that US President Donald Trump launched this month, and authorities are bracing for pain in exports, hitherto a bright spot in supporting economic growth, with the likely loss of much of the all-important American market.
GDP growth came in at 5.4 per cent in the first three months of the year, the National Bureau of Statistics said, well above consensus forecasts. That matched the 5.4 per cent growth in the previous quarter, which had rescued 2024’s full-year growth.
There are concerns China will struggle to reach the 2025 target of around 5 per cent announced by Premier Li Qiang last month. Regulators have turned to stimulus to revive growth and prod reluctant consumers to spend.
The monthly figures had silver linings. March industrial output increased by 7.7 per cent as producers ramped up. Importantly, retail sales rose by 5.9 per cent in March, up from 4 per cent in the first two months.
Due to external uncertainty sparked by Trump, China is keen to stoke domestic demand and is relying heavily on spendthrift consumers to open their wallets.