Early 2025: China's Industrial Surge and Retail Boost

Early in 2025 saw China increase its factory output with robust growth. March saw a 7.7% year-on-year rise more than dwarfing January and February's 5.9% rise. The March rise was due to producers ramping up production before new U.S. trade tariffs came into effect. Factory output in April rose 6.1% year-over-year, surpassing market estimates but easing from March.

Retail sales improved as well, with March posting a 5.9% year-on-year gain above expectations. Expansion was supported by government stimulus measures to spur consumption. Retail sales had already increased 4.0% year-over-year in January and February, the highest since November 2024, due to extravagantly spending festivals during Lunar New Year.

Government measures continue to need further fiscal and monetary injection to keep the economy going, particularly since external demand is uncertain and local confidence is muted. While March saw industrial production helped by pre-tariff export stimulus, it is expected to be sharply impacted by rising trade tensions. Retail sales are likely to be boosted by government measures to encourage domestic consumption in a period of global and domestic challenges.