China's economy grew 5.4% in the first quarter as exporters rushed to beat Trump's tariffs

BANGKOK — China's economy expanded at a 5.4% annual pace in January-March, the government said Wednesday, supported by strong exports ahead of U.S. President Donald Trump's rapid increases in tariffs on Chinese products.

With the trade war clouding the outlook, analysts are forecasting that the world's second largest economy will slow significantly in coming months, however, as tariffs as high as 145% on U.S. imports from China take effect. Beijing has hit back at the U.S. with 125% tariffs on American exports, while also stressing its determination to keep its own markets open to trade and investment.

Chinese leader Xi Jinping's visits is visiting several other Asian countries this week as he makes a case for free trade, presenting China as a source of ''stability and certainty'' in uncertain times.

Xi was visiting Vietnam, Malaysia, and Cambodia, while the U.S. announced that a senior State Department official, Sean O'Neill, would be traveling this week to Vietnam's capital Hanoi and to Ho Chi Minh City, to Cambodia's Siem Reap and to Tokyo.

China also has been highlighting its focus on trade with countries other than the United States at various trade fairs that are showcasing its vast market and competitiveness as a manufacturing giant.

At China's Canton trade fair, in the southern city of Guangzhou, exporters were emphatic about the need to look beyond selling to Americans.

''We need to diversify our market. When the West is dark, the East is bright. The global market is huge,'' said Wallace Huang, the export business director of Guangdong Weking Group, which makes rice cookers. ''In recent years, our exports to the U.S. have slowly been declining.''

The trade factor

Exports helped China's economy expand at a 5% annual rate in 2024 and this year's official target is about 5%.

In the near term, the tariffs will put pressure on China's economy, but they won't derail long-run growth, Sheng Laiyun, a spokesperson for the National Bureau of Statistics, told reporters. He noted that China's exports to the United States have fallen to less than 15% of total exports from more than 19% five years ago.

''China's economic foundation is stable, resilient and has great potential. We have the confidence, ability and confidence to cope with external challenges and achieve our established development goals,'' Sheng said.

In quarterly terms the economy grew 1.2% in January-March, slowing from 1.6% in the last quarter of 2024.

Chinese exports surged more than 12% from a year earlier in March and nearly 6% in U.S. dollar terms in the first quarter, as companies rushed to beat Trump's tariffs. That has supported robust manufacturing activity in the past several months.

China's industrial production rose 6.5% from a year earlier in the last quarter, led by a nearly 11% increase in output of equipment manufacturing.

The strongest growth was in advanced technologies, such as production of battery electric and hybrid vehicles, which jumped 45.4% year-on-year. Output of 3D printers soared almost 45% and of industrial robots surged 26%.

Weaker property investment and consumer prices

Despite relatively fast growth by global standards, the Chinese economy has struggled to regain momentum since the COVID-19 pandemic as downturn in the property market has pushed unemployment higher, leaving families wary about spending.

Consumer prices fell 0.1% in the first quarter, suggesting that demand is not keeping up with supply for many industries. Investment in real estate also remained weak, falling nearly 10% from a year earlier despite government efforts to spur more lending for housing purchases.

The tariffs crisis looms as another massive blow at a time when Beijing is striving to get businesses to invest and hire more workers and to persuade Chinese consumers to spend more.

The outlook

Both private and public sector economists have remained cautious about what to expect, given how Trump has kept switching his stance on the details of his trade war.

''Given the events over the past two weeks, it is extremely difficult to predict how the U.S. and China tariffs on each other might evolve,'' Tao Wang and other UBS economists said in a report.

The International Monetary Fund and Asian Development Bank have stuck with more optimistic forecasts of about 4.6% growth this year.

After taking office, Trump first ordered a 10% increase in tariffs on imports from China. He later raised that to 20%. Now, China is facing 145% tariffs on most of its exports to the United States.

UBS estimates that the tariffs, if they remain roughly as they are, could cause China's exports to the United States to fall by two-thirds in coming months and that its global exports could fall by 10% in dollar value. It cut its forecast for economic growth this year to 3.4% from an earlier 4%. It expects growth to slow to 3% in 2026.

China has stepped up efforts to spur more consumer spending and private sector investment over the past seven months, doubling down on subsidies for auto and appliance trade-ins and channeling more funding for housing and other cash strapped industries.

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AP researchers Yu Bing and Shihuan Chen contributed.