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China: 2025 Starts With Promising Growth

A strong first quarter driven by exports and consumer spending signals resilience, but challenges from US sanctions loom

By EC Invest

China's GDP grew by 1.2% in the first quarter of 2025 compared to the previous three months and 5.4% annually. To find more dynamic Chinese economic activity, we have to go back to the second quarter of 2023.

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Paradoxically, the trade war explains the Chinese economy's very good start to the year.

In anticipation of the tariff hike, Chinese producers have been running their factories at full capacity and shipping as many goods abroad as possible in the first three months of the year.

Thanks to the measures taken by the Beijing authorities to revive domestic consumption, retail sales have also been more dynamic.

Household consumption is critical to growth

The trade war will undoubtedly penalize the Chinese economy in the coming months, and it will not be able to repeat the performance of the first quarter.

But, with this good start to the year, GDP growth in 2025 will remain high. Especially if household consumption continues to recover and China manages to cushion the impact of US sanctions.

However, even amid geopolitical friction, China possesses the tools to sustain growth — and for prudent investors, Chinese equities may play a stabilizing role within a global portfolio.

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