China's economy expanded by 5.4% year-on-year in the first quarter of 2025, surpassing market forecasts and signaling resilience amid global uncertainties. Strong retail sales, industrial activity, and targeted policy measures drove the growth, according to official data and analysts.
Domestic Demand Shines as Retail Sales Surge
March retail sales jumped 5.9% – the fastest pace in over a year – amid improved consumer confidence. Industrial output rose 7.7%, reflecting renewed factory momentum. Huang Zichun of Capital Economics noted government support measures "should continue to shore up domestic demand," citing expanded fiscal spending and potential monetary easing in coming months.
Investment Recovery Signals Broad Momentum
Fixed-asset investment growth (excluding property) and a double-digit increase in excavator usage point to stabilizing infrastructure spending. "The data looks encouraging, as growth may help close the output gap," said ANZ's Xing Zhaopeng. Energy production highlighted structural shifts, with nuclear power generation soaring over 20% in March.
Balancing External Risks
While analysts welcomed the results, SMBC's Ryota Abe warned trade tensions and U.S. tariffs could necessitate additional stimulus. Fidelity International's George Efstathopoulos emphasized the need for "calibrated policies" rather than large-scale interventions. Cross-border e-commerce platforms and logistics firms saw significant stock rallies, underscoring supply chain resilience.
