Overview

• According to official data, China’s headline year-on-year economic growth was stable in Q1 – increasing by 5.4%. On a quarterly basis, seasonally adjusted growth eased to 1.2% qoq (down from the relatively strong 1.6% qoq increase in Q4 2024).
• China’s economic growth was overly reliant on trade in 2024, but the US tariffs and limits on the capacity to divert trade to other markets (with the added risk that other countries will seek to protect their domestic markets) will see trade significantly contracting from growth this year. We expect that Chinese authorities will provide additional fiscal support over and above the 30-point consumption plan unveiled in mid-March, but these are likely to be spread over time and lag the trade impact. As a result, we have revised our forecasts for China’s growth lower – to 4.1% in 2025 and 3.9% in 2026 (from 4.6% and 4.2% respectively previously).
• China’s industrial production accelerated in March – increasing by 7.7% yoy – up from an average of 5.9% yoy in January-February. This was the largest increase since June 2021 (when data was highly distorted by the impact of COVID-19 disruptions).
• Growth in China’s real fixed asset investment was stronger in March – increasing by 6.8% yoy (from 6.3% yoy previously). State-owned enterprises (SOEs) have dominated investment in the post-pandemic period, however there has been a modest uptick in private sector investment in recent months.
• China’s trade surplus increased in March 2025 – rising to US$102.6 billion (from an average of US$85.3 billion per month across January and February). This was the second highest monthly surplus on record, only marginally softer than the level recorded in December 2024 (US$104.6 billion). Despite this result coming ahead of the anticipated increase in US tariffs in April, there was no strong evidence for front running exports to the US – with stronger growth in exports to emerging Asia and the European Union.
• Real retail sales rose by 6.0% yoy (up from 4.1% yoy previously). This was the fastest rate of increase since December 2023 but remains weaker than the pre-pandemic trend.
• China’s new credit issuance increased strongly in the first quarter of 2025 – increasing by 18.5% yoy to total RMB 15.2 trillion. It is worth noting that this increase followed a sizable contraction (-9.4%) in 2024. This increase has overwhelmingly been driven by government bond issuance – which rose by 185% – while bank lending also rose (following a contraction last year).

For further details please see China’s economy at a glance (16 March 2025)