China’s economic growth is expected to have slowed to 5.1% in Q1 2025, down from 5.4% in the previous quarter, according to a Reuters poll of 57 economists. The outlook remains weak, with full-year growth projected at 4.5% - below the government’s 5% target - amid escalating trade tensions with the U.S. and domestic economic struggles.
The forecast reflects mounting pressure on policymakers as Donald Trump’s return to the political scene signals more aggressive trade policies. His administration has raised tariffs on Chinese goods to an effective rate of 145%, prompting Beijing to retaliate with tariffs of up to 125% on U.S. imports.
Analysts expect further stimulus, including fiscal expansion and monetary easing, to combat the slowdown. Citi economists anticipate around 1.5 trillion yuan ($204.9 billion) in mid-year funding to support domestic demand.
China’s recovery remains fragile. While factory activity and retail sales show signs of improvement, deflation and high unemployment persist. Consumer prices dropped for a second month in March, and factory-gate deflation deepened, raising concerns over weak domestic demand and excess inventory.
Fitch recently downgraded China’s credit rating, citing rising debt and fiscal risk. Meanwhile, the People’s Bank of China is expected to reduce banks’ reserve requirement ratio and cut the loan prime rate in Q2 to support growth.
China’s inflation is forecast to rise slightly to 0.4% in 2025 and 1.0% in 2026, still well below the official 2% target.
Official Q1 GDP and March activity data are due on April 16.