China’s economy grew 5.4% YoY in the first quarter of 2025, surpassing expectations. However, growth faces pressure as the U.S. raises tariffs to 145%, prompting retaliation from Beijing. While retail sales showed strength, deflation, high unemployment, and declining property investment signal an uneven recovery. UBS cut China’s full-year growth forecast to 3.4%, citing “unprecedented” challenges from U.S. tariffs. First-quarter quarterly growth slowed to 1.2% from 1.6% in Q4 2024.