China's economy grew at an annualised rate of 5.4% in the first quarter, the government reported on Wednesday, a performance bolstered by robust exports prior to the significant tariff hikes imposed by U.S. President Donald Trump on Chinese goods.

Because of the trade dispute making the future unclear, experts think the world's second biggest economy will slow down a lot soon. This is happening as high taxes, up to 145%, start on goods from the US coming into China. China has also put high taxes, 125%, on goods from the US going to China. At the same time, China says it wants to keep its markets open for trade and investment.

This week, Chinese leader Xi Jinping is visiting several other Asian countries to advocate for free trade, portraying China as a source of "stability and certainty" in uncertain times.

While Xi was on a diplomatic trip to Vietnam, Malaysia, and Cambodia, the U.S. government revealed that a high-ranking State Department representative, Sean O'Neill, was scheduled to visit Vietnam's capital, Hanoi, and Ho Chi Minh City, as well as Cambodia's Siem Reap and Tokyo, during the current week.

China has also been emphasising its trade relations with countries other than the United States at various trade exhibitions, where it is showcasing its substantial market and competitive edge as a manufacturing powerhouse.

Fueled by exports, China's economy is projected to grow by roughly 5% annually in 2024, aligning with the official target set for this year.

According to Sheng Laiyun, a spokesperson for the National Bureau of Statistics, the tariffs are expected to exert short-term pressure on China's economy, though they are unlikely to impede its long-term expansion. He further indicated that China's exports to the United States now constitute less than 15% of its total exports, a notable decrease from over 19% half a decade ago.

China's economy possesses a stable and resilient foundation, coupled with considerable potential. We are confident and capable of confronting external challenges and realising our predetermined development objectives," Sheng asserted.

On a quarterly basis, the economy expanded by 1.2% during the January-March period, a moderation from the 1.6% growth observed in the final quarter of 2024.

Chinese exports experienced a significant rise, exceeding 12% year-on-year in March and approaching a 6% increase in U.S. dollar value during the first quarter, as businesses expedited shipments to circumvent impending tariffs imposed by Trump. This activity has underpinned strong manufacturing performance over recent months.

Much of this activity occurred early on, driven by a surge in proactive measures taken in anticipation of increased US tariffs and a substantial accumulation of inventory within the US as importers urgently sought to gain an advantage.

In the previous quarter, industrial output experienced a 6.5% year-on-year increase, driven primarily by an almost 11% surge in equipment manufacturing production.

Leading the expansion were advanced technologies, notably the manufacturing of battery electric and hybrid vehicles, which saw a considerable increase of 45.4% compared to the previous year. The production of 3D printers experienced a substantial rise of nearly 45%, while that of industrial robots grew significantly by 26%.

Even though the Chinese economy has expanded at a comparatively rapid rate globally, it has found it difficult to recover impetus since the COVID-19 pandemic, as a slump in the property sector has led to increased unemployment, making households cautious about their expenditure.

Consumer prices experienced a marginal decline of 0.1% in the first quarter, indicating a potential imbalance between supply and demand across numerous sectors. Concurrently, real estate investment persisted in its sluggish performance, decreasing by almost 10% year-on-year, notwithstanding governmental initiatives designed to stimulate mortgage financing.

The growing problem with tariffs is another big difficulty for Beijing right now, as they are trying to get companies to invest and hire more people, and also encouraging people in China to spend more money.

Economists in both the private and public sectors are still careful about what might happen because Trump keeps changing his mind about the details of his trade war.

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's goods might change, according to Tao Wang and other economists from UBS in a report.

The International Monetary Fund and Asian Development Bank have maintained their more optimistic projections of approximately 4.6% growth for this year.

Following his inauguration, Trump initially mandated a 10% tariff hike on Chinese imports, subsequently doubling it to 20%. Currently, China confronts a 145% tariff on the majority of its exports to the United States.

UBS projects that if the tariffs largely persist at their current level, China's exports to the United States could diminish by two-thirds in the near future, and its worldwide exports might decrease by 10% in terms of dollar value. Consequently, it has revised its economic growth forecast for this year downwards to 3.4% from an initial 4%, with anticipated further deceleration to 3% in 2026.

Over the past seven months, China has intensified its efforts to stimulate increased consumer spending and private sector investment, significantly enhancing subsidies for auto and appliance trade-ins and allocating greater funding to housing and other financially struggling sectors.