China's economy grew at an annual rate of 5.4% in the first quarter, according to the government on Wednesday, boosted by vigorous exports before U.S. President Donald Trump's significant tariff hikes on Chinese goods.

Amid the looming trade conflict, analysts anticipate a substantial deceleration in the world's second-largest economy over the ensuing months, particularly as tariffs reaching 145% on US imports into China are implemented. Beijing has retaliated with tariffs of up to 125% on American exports, concurrently emphasizing its commitment to maintaining open markets for trade and investment.

Chinese leader Xi Jinping is visiting several other Asian countries this week to advocate for free trade, positioning China as a beacon of "stability and certainty" amid turbulent times.

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

China has been spotlighting its emphasis on trade with nations other than the United States at various trade exhibitions, underscoring its expansive market and its competitive edge as a manufacturing powerhouse.

Driven by exports, China's economy is forecast to grow by approximately 5% in 2024, aligning with the official target for the year.

According to Sheng Laiyun, spokesperson for the National Bureau of Statistics, the immediate impact of the tariffs on China's economy will be significant, yet they are unlikely to impede its sustained long-term expansion. He highlighted 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 prior.

China's economy is strong and can handle difficulties, with a lot of potential for growth. We are confident and capable of dealing with problems from outside and reaching our development goals, Sheng said.

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

China's exports experienced a substantial increase, rising by over 12% year-on-year in March and nearly 6% in US dollar terms during the first quarter, as businesses hurried to preemptively mitigate the impact of impending tariffs imposed by the Trump administration. This surge has underpinned vigorous manufacturing output over the preceding months.

"A significant portion of this activity occurred early on, driven by a surge of proactive measures taken before anticipated increases in U.S. tariffs and a substantial build-up of inventories in the United States as importers hurried to gain an advantage," Stephen Innes of SPI Asset Management noted in a commentary.

Industrial production witnessed a substantial 6.5% surge year-on-year in the final quarter, largely driven by an almost 11% escalation in the output of equipment manufacturing.

The most significant expansion occurred in cutting-edge technologies, particularly in the manufacture of battery electric and hybrid vehicles, which saw a remarkable annual increase of 45.4%. Production of 3D printers experienced a substantial rise of almost 45%, while output of industrial robots surged by 26%.

Although the Chinese economy has grown quite quickly compared to other countries, it has been difficult for it to get back on track since the COVID-19 pandemic. This is because problems in the housing market have increased the number of people out of work, making families hesitant to spend money.

Consumer prices went down by 0.1% in the first three months of the year, which suggests that people are not buying as much as businesses are producing in many areas. At the same time, investment in property stayed low, dropping by almost 10% compared to the year before, even though the government tried to encourage more loans for buying homes.

At a time when Beijing is trying to get businesses to invest and hire more people, and to get Chinese people to spend more, the growing problem with tariffs is a big and serious challenge.

Economists in both the private and public sectors have stayed careful about what might happen, because Trump has kept 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, said a report from Tao Wang and other economists at UBS.

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

Upon assuming office, Trump initially mandated a 10% escalation in tariffs on Chinese imports, subsequently elevating this to 20%. Currently, China contends with tariffs reaching 145% on the majority of its exports to the United States.

UBS forecasts that the present tariff levels are likely to result in a two-thirds reduction in China's exports to the United States over the next few months, alongside a 10% decline in the dollar value of its global exports. Consequently, it has revised its economic growth projection for this year downwards to 3.4% from the previous 4%, and anticipates growth slowing further to 3% by 2026.

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