China's Q1 economic report card is in: GDP grows by 5.4%

China's gross domestic product (GDP) for the first quarter of 2025 stood at 31.875 trillion yuan ($4.337 trillion), rising 5.4 percent on a year-on-year basis, and 1.2 percent quarter-on-quarter compared to the the previous Q4, as per data released by the National Bureau of Statistics (NBS) on Wednesday.

This economic growth, which was above analysts' forecasts, has been driven by a 3.5 percent growth in value-added by the primary sector, 5.9 percent growth in the secondary sector and 5.3 percent growth in the tertiary sector. Industrial value-added by enterprises above designated size expanded by 6.5 percent year-on-year for the quarter and 7.7 percent in March.

Equipment manufacturing and high-tech manufacturing performed particularly well in the first quarter, with increases of 10.9 percent and 9.7 percent, respectively. The service sector also maintained rapid growth, especially modern services such as information transmission, software, and information technology services, which saw growth of 9.9 percent.

Agricultural production was in good shape, with the added value of crop farming increasing by 4.0 percent year-on-year in Q1. 

The consumer market witnessed gradual recovery, with the total retail sales of consumer goods increasing by 4.6 percent year-on-year for the quarter and accelerating to 5.9 percent in March. Fixed-asset investment rose steadily, with high-tech industry investment growing by 6.5 percent. The total value of goods imports and exports increased by 1.3 percent, with exports up by 6.9 percent to 6.13 trillion yuan. Per capita disposable income of residents grew steadily, with an actual increase of 5.6 percent.

The report from the NBS noted that China's economy has continued to improve overall with the support of macro policies, and has made new progress in high-quality development. Despite a complex and severe external environment, the domestic economic foundation is being continuously consolidated, the role of innovation is being enhanced, and new drivers of development are being accelerated, it added.

Responding to the GDP data, analysts and economists highlighted the encouraging figures while sounding caution due to US tariff hikes and stating expectations for stimulus measures.

"Before the tariff storms hit, China's GDP growth likely eased but remained solid, thanks to the recovery in domestic demand," analysts at Societe Generale said in a note, adding "The most pleasant surprise is retail sales which shows that consumption subsidies are working."

"With this, we now expect the Chinese authorities to announce further stimulus measures to prop up the domestic demand further to encounter the adverse impact of the tariffs," Ryota Abe, an economist at SMBC Singapore, told Reuters.

Xing Zhaopeng, a senior China strategist at ANZ in Shanghai, added, "The data looks encouraging, as growth may help close the output gap. It also explained why the authorities did not cut RRR. Both external and domestic demand were good in the first quarter. Retail sales remained extremely strong despite negative price effects. Fixed asset investment (excluding property) is recovering well, in line with double-digit growth in excavator sales and working hours."

Speaking on the tariff front, NBS deputy head Sheng Laiyun who addressed the State Council Information Office briefing was bullish about China's resilience. "In the short term the high tariffs imposed by the US may exert some pressure on China's economy and foreign trade but it will not change the long-term positive trajectory of China's economic growth," Sheng said.

"China's economy has a stable foundation, multiple advantages, strong resilience and vast potential," he added.