China's Economy Grows 5.4% Amid Trade War Challenges

China's economy grew by 5.4% in the first quarter of 2025, surpassing expectations of 5.1%, even as the ongoing trade war with the U.S. poses significant challenges. The growth is attributed to a policy stimulus push, despite the adverse effects of U.S. tariffs totaling 145%, which have led to concerns about a decoupling between the two largest economies. Analysts are increasingly pessimistic, with major investment banks downgrading their forecasts for China's GDP growth, with Morgan Stanley predicting a decline to 4.2% and UBS projecting a mere 3.4% for the year. The Chinese government has set an ambitious growth target of around 5%, but the outlook is clouded by weak domestic consumption and a property market downturn. Retail sales and industrial output also showed strong performance in March, indicating some resilience in the economy. However, economists warn that growth may deteriorate rapidly as tariff pressures escalate and negotiations seem unlikely to provide relief.