China registered a year-on-year growth of 5.4% in its gross domestic product (GDP) in the first quarter of 2025, outpacing forecasters’ predictions of a 5.1% gain. The country has been facilitated by improved, though still moderating, activity in domestic spending and industrial output. Retail sales expanded by 5.9% in March, while manufacturing rose by 7.7%, an indicator of improved domestic demand and output.
While the rate of growth annually exceeded expectations, the quarter-to-quarter rate suggested a slower pace. The economy expanded 1.2% compared to the previous quarter, below 1.6% in the previous quarter of 2024. The decline shows some problems that could affect growth for the next several months.
One of the major concerns is China’s weak property market. Investment here fell nearly 10% compared with the same period last year, continuing a downtrend. In addition, the trade situation has become riskier following recent tariff moves by the United States. Additional import tariffs on Chinese products of up to 145% will help limit China’s export competitiveness and suppress foreign buyers’ demand.
These developments have seen the Chinese growth estimates revised by different financial institutions. The most recent estimates for the year are currently 3.4% to 4.5%. UBS, for example, forecasts a slowdown to 3.4% by 2025 and views the figure as further decreasing to about 3% in 2026. These estimates are founded on exercising prudence by external investors and experts over external pressures as well as domestic structural issues.
Consequently, Chinese governments have provided policy support to stabilize growth. The government has pledged to cut interest rates and adjust reserve requirements for banks. These efforts will assist in maintaining financial liquidity and driving more business activity. Despite rising challenges, China reconfirmed its target of approximately 5% GDP growth in 2025.
The first-half 2025 performance shows resilience among key sectors. However, the ongoing trade tensions and muted real estate investment persist in raising sustainability doubts in future quarters.