America might have struck China down with the tariff hits, but the dragon economy is still standing strong. China’s first-quarter GDP growth expanded by 5.4%, surpassing analyst predictions who anticipated headwinds from escalating tariff concerns and persistent domestic challenges in the property market. This performance has provided Beijing with ammunition against mounting US trade pressures, especially as markets grow increasingly anxious about the deteriorating economic relations between the world’s largest economies.

• Industrial output experienced the fastest growth since Jun. 2021 at 7.7%, while retail sales jumped 5.9%, marking the strongest increase since Dec. 2023.
• Despite strong data, Chinese markets tumbled, with the Hang Seng Tech index down 4.3% and the CSI 300 slipping 1% as investors feared the impact of tariffs would materialize later.

Dollar falls from grace: While China posts strong numbers, investor sentiment toward the US dollar has soured ahead of its own GDP release. 61% of fund managers expect depreciation over the next year, the most bearish outlook since 2006. This pessimism coincides with the Dollar’s 9% decline this year, a drop worsened by Trump’s tariff push. While firms like AppleAAPL

got a temporary exemption from the 145% tariffs on Chinese goods, Commerce Secretary Howard Lutnick clarified the 90-day pause targets allies, not China, keeping pressure high as trade talks remain stalled. With China retaliating through rare earth export cuts and currency devaluation tactics, the standoff could potentially threaten global growth just as China’s domestic economy finds its footing.