Editor’s note:Â Zhou Jianjun is an assistant researcher at the Institute of State System Research and School of Economics at Zhejiang University. The article reflects the author’s opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.
On April 16, 2025, China released its economic data for the first quarter. Despite facing numerous domestic and international headwinds, the country still registered impressive economic growth. This fully highlights the resilience and vitality of the Chinese economy and suggests that the US tariff shocks have had little substantive impact on China’s economic development.
China’s economic growth data are impressive, with multiple key factors improving. In the first quarter of 2025, the country’s GDP reached 31.8758 trillion yuan ($4.337 trillion), growing 5.4 percent year on year, higher than the around 5 percent full-year economic growth of 2024 and slightly above the 5.3 percent recorded in Q1 2024. This places China among the world’s top-performing major economies. Specifically, several key indicators demonstrated positive recovery. Value-added industrial output expanded by 6.3 percent, up 0.6 percentage point from last year’s full-year figure; value-added service output grew by 5.3 percent, an increase of 0.3 percentage point; fixed-asset investment went up 4.2 percent, one percentage point higher than in the previous year; and total retail sales of consumer goods gained 4.6 percent, a rise of 1.1 percentage points. Together, these indicators reflect a steady and upward trajectory for the Chinese economy in 2025, laying a solid foundation for the government to achieve its annual GDP growth target of around 5 percent this year.
China’s strong growth momentum of domestic demand has weakened the impact of the US tariff shocks. After Trump took office, the US imposed two rounds of 10 percent tariffs on Chinese goods during the first quarter. However, China anticipated such moves long ago and was well prepared. In addition to strong countermeasures against the US’s tariff imposition, China has also rolled out a suite of incremental policies to boost consumption and expand domestic demand, thus stimulating economic growth. These measures have significantly reduced the marginal influence of the US tariff policy on China. The Chinese government has made vigorously boosting consumption, improving investment returns, and stimulating domestic demand across the board a top priority among its ten major tasks for 2025. On March 16, it released the plan on special initiatives to boost consumption. Relying on dual drivers of consumption and investment, China aims to increase the contribution of domestic demand to economic growth and shift the Chinese economy from a growth model driven by external circulation to one powered by internal circulation, thereby strengthening the economy’s risk resistance.
Instead of weakening China, tariff hikes have exposed the US’s vulnerabilities. The US attempted to weaken China through tariff hikes, but the outcome was quite the opposite. While this move has not delivered a substantive blow to the Chinese economy, it has triggered a series of problems within the US itself. In April 2025, the country tried to curb imports of Chinese goods by imposing a staggering 145 percent “reciprocal tariff”. The Chinese government retaliated by levying a 125 percent tariff on American goods. These high tariffs caused widespread panic in US capital markets. The Dow Jones and Nasdaq indices plummeted, US Treasury bonds came under heavy selling pressure, and the dollar index plunged. In addition, restrictions on Chinese imports drove up domestic prices in the US, prompting panic buying among American consumers. In March, the price of eggs rose 5.9 percent month-on-month and 60.4 percent year-on-year in the US, reaching an average of $6.23 per dozen (12 eggs).
China has successfully countered the US suppression with the expansion of domestic demand and industrial upgrading. In the face of external pressure brought about by escalating US tariffs, the Chinese government has responded primarily through the expansion of domestic demand and industrial upgrading. On the one hand, a series of new incremental policies have been introduced to unlock household consumption potential and tap into new areas of consumption growth. On the other hand, the government is encouraging technological innovation to drive industrial upgrading. Tech companies represented by the “Six Little Dragons of Hangzhou” are thriving, fueling the rapid development of emerging sectors such as artificial intelligence and robotics. Through the expansion of domestic demand and industrial upgrading, China can effectively neutralize the impact of US tariff shocks, foster high-quality economic growth, and stay on track to meet its GDP growth target of around 5 percent for 2025.
