“UNPRECEDENTED” CHALLENGE
For 2025, the economy is expected to grow at a subdued 4.5 per cent pace year-on-year, the Reuters poll showed, slowing from last year’s 5 per cent pace and falling short of the official target of around 5 per cent. Many analysts have sharply slashed their GDP forecasts for this year.
UBS has downgraded its forecast on China’s 2025 growth to 3.4 per cent from 4 per cent, on the assumption that Sino-US tariff hikes will remain in place and that Beijing will roll out additional stimulus.
“We think the tariff shock poses unprecedented challenges to China’s exports and will set forth major adjustment in the domestic economy as well,” analysts at UBS said in a note.
While several other countries have been swept up in US tariffs, Trump has targeted China for the biggest levies.
Last week, Trump lifted duties on China to 145 per cent, prompting Beijing to jack up levies on US goods to 125 per cent and dismissing US trade actions as “a joke”.
On a quarterly basis, the economy expanded 1.2 per cent in the first quarter, slowing from 1.6 per cent in October to December.
Retail sales, a key gauge of consumption, rose 5.9 per cent year-on-year in March after gaining 4 per cent in January to February, while factory output growth quickened to 7.7 per cent from 5.9 per cent in the first two months. Both numbers topped analysts’ forecasts.
The retail sales uptick was driven by sharp double-digit gains in home electronics and furniture sales, helped by the government’s consumer goods trading scheme.
But China’s property downturn remained a drag on overall growth.
Property investment fell 9.9 per cent year-on-year in the first three months, extending the 9.8 per cent drop in January to February. March new home prices were unchanged on month.