China's Economic Outlook Remains Positive in April Despite Tariff Uncertainty – UOB

China: Economic Mood Remains Resilient in April Despite US Tariff Uncertainty – UOB

China’s economy showed surprising resilience in April, according to a report by UOB Group’s economist Ho Woei Chen, even as trade tensions with the United States escalated. The implementation of retaliatory and tit-for-tat tariffs by the US had only a limited effect, with industrial production (IP) remaining healthy thanks to frontloaded orders from markets not affected by US tariff suspensions.

Industrial Production Steady, But Consumption and Housing Falter

While the manufacturing sector continued to perform well, other sectors were more negatively impacted. Retail sales and urban Fixed Asset Investment (FAI) fell short of expectations, weighed down by uncertainty from the trade environment. Still, both indicators maintained a positive month-on-month (m/m) growth rate, and unemployment rates showed a slight decline.

However, China’s housing market remained a major challenge. Key indicators, including residential property sales, real estate investment, and home prices, all weakened in April. These trends suggest policymakers may need to take further action to stabilize the sector.

Outlook Revised Up Amid Temporary Trade Truce

Taking into account the 90-day US-China trade truce and its short-term economic boost, UOB has revised its 2025 GDP growth forecast for China to 4.6% (previously 4.3%). For Q2 2025, UOB expects growth at 4.9% year-on-year, moderating to 4.2% in the second half of the year.

Still, UOB cautioned that significant uncertainty remains. The final outcome of US-China trade talks, the longevity of tariff suspensions, and the scale of government stimulus will all be crucial in shaping China’s economic performance over the coming months.