China's economy started 2025 on solid footing, bolstered by a structural shift toward domestic demand and innovation, positioning the country to better weather global uncertainties.

The country's gross domestic product (GDP) grew 5.4% year on year to 31.8758 trillion yuan (about $4.42 trillion) in the first quarter of 2025, data from the National Bureau of Statistics (NBS) showed Wednesday.

China's GDP grew 5% year on year in 2024 and the country has targeted its full-year economic growth at around 5% for this year.

The country's economy delivered a strong start in the first quarter, ranking among the highest of the world's major economies, Sheng Laiyun, deputy head of the NBS, told a press conference Wednesday.

At the same time, Sheng cautioned that the external environment has become increasingly complex and challenging, with a rapid rise in global trade protectionism and growing strains on the international economic order.

China has made thorough policy preparations to address external changes, Sheng said, noting that a series of targeted marco policies have already taken effects and that more incremental policies will be introduced as needed to mitigate external shocks.

Solid start

Highlighting broad-based improvements across key indicators, Sheng pointed out that value-added industrial output expanded 6.5% year on year. In March alone, the industrial output grew 7.7% from one year earlier.

During the period, fixed-asset investment went up 4.2% year on year, with investment in infrastructure construction rising 5.8%, and manufacturing investment increasing 9.1%, according to the NBS data.

Retail sales of consumer goods, a major indicator of the country's consumption strength, gained 4.6% year on year.

Supported by targeted policies to boost consumption, service-related spending also picked up pace. In the first quarter, retail sales of services grew 5% year on year, outpacing goods retail by 0.4 percentage points.

Wednesday's data also showed that the country's per capita disposable income increased by 5.5% year on year in nominal terms to 12,179 yuan in Q1, with the employment situation remaining stable.

Sheng credited these improvements to decisive policy support, local-level responsiveness, and the rapid buildup of innovation-driven momentum.

Noting that China's massive market, backed by a population of 1.4 billion and a per capita GDP exceeding $13,000, offers substantial room for both consumption and investment, Sheng said this strong domestic demand potential will continue to support the country's sustained economic growth.

Faster upgrade 

China has been steadily advancing structural upgrading and high-quality development, with its growth model shifting fundamentally from one driven by investment and exports to one increasingly powered by domestic demand and innovation, Sheng stressed.

Over the past five years, domestic demand has contributed more than 80% of the country's economic growth on average, he added.

As part of its move to make domestic demand the main engine and anchor of economic growth, China unveiled a targeted consumption-boosting plan in March. The initiative reflects the policy direction outlined in this year's government work report, which emphasizes improving living standards and boosting consumer spending.

New consumption scenarios are rapidly emerging with the rise of big data and AI, Sheng said, citing movie "Ne Zha 2" as an example of booming cultural demand that reflects the country's vibrant consumer innovation and growth potential.

Emerging sectors such as the digital economy are playing an increasingly important role in China's growth, with new drivers expanding steadily and contributing to greater economic resilience and long-term stability, Sheng said.

Regarding foreign trade, Sheng noted that a more diversified export structure is emerging, lowering reliance on any single trading partner.

When asked about the impact of U.S. tariff hikes, Sheng said they "may exert short-term pressure on China's economy and foreign trade, but will not alter the country's long-term positive outlook," pointing to China's firm fundamentals, diverse strengths, strong resilience, and substantial growth prospects.

China is well prepared to address all uncertainties, Chinese Premier Li Qiang said when presiding over a symposium with economic experts and entrepreneurs on April 9.

Li noted that it is particularly crucial to ensure effective economic work in the second quarter and beyond, stressing that it is necessary to implement more proactive macro policies and introduce new incremental policies in a timely manner in light of the needs of the situation.