China's economy experienced a 5.4% annual growth rate in the first quarter, according to a government announcement on Wednesday, a performance bolstered by robust exports prior to significant tariff hikes imposed by U.S. President Donald Trump on Chinese goods.

Amidst the uncertainty generated by the trade dispute, experts predict a substantial slowdown in the global second-largest economy over the next few months, particularly as tariffs reaching 145% on Chinese imports from the U.S. are implemented. Beijing has retaliated against the U.S. with tariffs of up to 125% on American exports, while concurrently affirming its commitment to maintaining open domestic markets for trade and investment.

This week, Chinese leader Xi Jinping is touring several other Asian nations, where he is advocating for free trade and portraying China as a source of "stability and certainty" amidst current global volatility.

While Xi was visiting Vietnam, Malaysia, and Cambodia, the U.S. said that a senior official from the State Department, Sean O'Neill, would travel this week to Hanoi and Ho Chi Minh City in Vietnam, Siem Reap in Cambodia, and Tokyo.

China has also been emphasizing its commitment to commerce with nations apart from the United States at numerous trade exhibitions, which serve to underscore its extensive market and prowess as a manufacturing powerhouse.

Robust exports contributed to the Chinese economy's expansion at an annual rate of 5% in 2024, aligning with this year's official target of approximately 5%.

According to Sheng Laiyun, spokesperson for the National Bureau of Statistics, the tariffs will exert immediate pressure on the Chinese economy, but are unlikely to impede long-term expansion, noting that exports to the US now comprise less than 15% of total exports, down from over 19% five years prior.

Sheng affirmed China's economic bedrock is stable, adaptable and holds substantial potential. He asserted confidence, capability, and the resolve to navigate external challenges and realise established development objectives.

On a quarterly basis, the economy experienced a growth of 1.2% during the January to March period, a deceleration compared to the 1.6% expansion observed in the final quarter of 2024.

In March, Chinese exports experienced a significant surge, exceeding 12% compared to the previous year, and demonstrating an almost 6% increase in U.S. dollar terms throughout the first quarter, as businesses expedited shipments to circumvent the impending tariffs proposed by Trump. This dynamic has underpinned vigorous manufacturing output in recent months.

Stephen Innes from SPI Asset Management commented that a significant portion of this occurred early on, driven by a surge in proactive measures before US tariffs increased and a rush to accumulate inventory in the United States as importers urgently sought to anticipate developments.

Industrial production advanced by 6.5% compared to the previous year in the final quarter, primarily driven by an almost 11% surge in the output of equipment manufacturing.

Significant expansion was observed in sophisticated technologies, including the manufacture of battery electric and hybrid vehicles, which experienced a substantial increase of 45.4% compared to the previous year; production of 3D printers saw a near 45% rise, and industrial robot output escalated by 26%.

Although the Chinese economy has expanded relatively quickly compared to global norms, it has faced difficulties in regaining pace since the COVID-19 pandemic, as a downturn in the property sector has led to increased unemployment, making households cautious about their expenditure.

Consumer prices experienced a decline of 0.1% in the initial quarter, indicating that demand is not aligning with supply across numerous sectors. Investment in real estate also persisted in its sluggishness, decreasing by close to 10% compared to the previous year, notwithstanding governmental endeavours to stimulate increased lending for housing acquisitions.

The coming tariffs crisis is another big problem for Beijing, which is trying to get companies to invest and hire more people and also get Chinese people to spend more money.

Economists in both the private and public sectors have maintained a cautious outlook regarding future expectations, particularly considering Trump's inconsistent positions on the specifics of his trade dispute.

Because of what has happened in the last two weeks, it is very hard to guess how the taxes the U.S. and China put on each other will change, according to a report by Tao Wang and other UBS economists.

The International Monetary Fund and Asian Development Bank have maintained more favourable projections of around 4.6% growth this year.

Upon assuming the presidency, Trump initially mandated a 10% augmentation in import duties on goods from China, subsequently elevating this to 20%; currently, China's exports to the United States face tariffs as high as 145%.

UBS projects that, if current tariff levels are maintained, China's exports to the United States could diminish by two-thirds in the near future, potentially leading to a 10% decrease in the dollar value of its global exports. Consequently, UBS has revised down its forecast for this year's economic growth to 3.4% from an initial 4%, and anticipates a further slowdown to 3% in 2026.

Over the last seven months, China has increased its efforts to encourage more consumer spending and private business investment. They have greatly increased money for trading in cars and appliances and are giving more money to the housing sector and other industries that need financial help.