Economy

This article is an on-site version of our Moral Money newsletter. Premium subscribers can sign up here to get the newsletter delivered three times a week. Standard subscribers can upgrade to Premium here, or explore all FT newsletters.Visit our Moral Money hub for all the latest ESG news, opinion and analysis from around the FT Welcome back. Donald Trump’s suspension of his “liberation day” tariffs prompted sighs of relief in much of the world. But it’s worth remembering that, as things stand, they are still due to come into force in a matter of weeks.For our first story today, I discussed with a senior UN trade official what this would mean for development in some of the world’s poorest countries. Also today, we pick through the details of a major change of course from the world’s biggest climate-focused banking coalition.We’ll be off on Friday, returning to your inbox on Monday. See you then.economic development Trump tariffs prompt rare rebuke from UN trade bodyIf US President Donald Trump were trying to craft a trade policy that would impede the development of low-income nations all over the world, the “reciprocal” tariffs he announced on April 2 would have been an excellent start. Last week, Trump suspended the full implementation of those elevated tariffs for 90 days, meaning that they are set to come into force in July. For millions of people in developing nations, that would be a serious blow — as an unusual intervention this week from the UN Trade and Development body (Unctad) has highlighted. Perhaps the greatest perversity of the formula behind Trump’s “liberation day” tariffs is that it reserves special punishment for nations that have made a start on developing their economies through export-led growth, but are not yet rich enough to import much from the US. Lesotho, which got the highest Trump tariff of any nation before the more recent escalation of the trade war with China, is a case in point. The landlocked southern African country was hit with a tariff rate of 50 per cent. That’s because it exported $237mn of goods to the US last year, but only imported $2.8mn in the other direction. Some content could not load. Check your internet connection or browser settings.This trade imbalance is unsurprising when you consider that Lesotho’s per capita GDP is a little over $900, making it one of the 20 poorest countries in the world. Trump’s tariffs threaten to worsen that poverty. Lesotho’s US exports are worth more than 10 per cent of its GDP. Worse, they are mainly in the highly competitive, low-margin clothing sector. A tariff at the planned level could leave its exporters unable to compete. This destructive dynamic has prompted Unctad to wade in, breaking with its normal practice of avoiding specific criticisms of individual countries’ policies.On Monday, the body published a report warning about the damaging impact that the tariffs would have on low-income countries. It argued that “vulnerable and small economies, whose activities have a negligible effect on trade deficits, should be exempt from new tariff hikes”. The US’s net imports from Lesotho, for example, amount to 0.019 per cent of the global US trade deficit. “This will represent a source of instability for these countries, and will make it even more difficult for them to eventually buy products from the US,” Luz Maria de la Mora, Unctad’s director of international trade and commodities, told me yesterday. She said all 44 economies listed by the UN as “least developed countries” should be exempted from the “reciprocal” tariffs should they come into force, as well as the 10 per cent baseline tariff that has already been applied.Four of the five countries hardest hit by the “reciprocal” tariffs are least developed countries, including Cambodia (49 per cent), Laos (48 per cent) and Madagascar (47 per cent). De la Mora called on major economies to push for relief for low-income nations as part of their engagement with the US on the new tariffs. “These countries don’t need to be hurt,” she said.Net-zero banking allianceUnpacking the NZBA’s bonfire of the rulesBeing a member of the Net-Zero Banking Alliance just got a heck of a lot easier.The body announced yesterday that a majority of its 128 member banks have voted to eliminate a host of rules, approving a new framework that, as we wrote last month, looked to many like a lowering of ambition. The NZBA’s organisers are hoping that the far looser requirements will stem further defections — following a rush of exits by most US and Japanese members — and encourage new members from developing nations to sign up. They might be right on that, but others are less pleased. The weakened rules have already led Dutch bank Triodos to quit the NZBA, saying the new approach did not “align with our own climate ambition”. Here’s what you need to know about the change: What’s missing?The new version of the NZBA commitment statement, to be signed by all members, is a much shorter document than the one it replaces.The previous version featured a string of mandatory commitments including a pledge to align all financing with a scenario in which global carbon dioxide emissions reach net zero by 2050, with global warming limited to 1.5C. Members were also required to publish annual updates on their progress in reducing their “financed emissions”, for review by UN officials. The new version, in contrast, is peppered with phrases stating that members “may”, or “are welcome” to take various measures. The document does say that each member bank “aims to align financing and business strategies with the Paris Agreement” (my italics), but this is much softer than the clear commitment in the prior document.The only sentence that sounds like a firm commitment is this one:We have independently chosen to support the transition to a low-carbon economy by setting and publishing individual science-based, near-term targets (or to do so within 18 months of joining), progress against targets, and transition plans.And even this, a footnote makes clear, is to be approached on “a comply or explain basis”.Meanwhile, the NZBA’s revised governance document has lost the whole section on its “accountability mechanism”, which detailed how the body would kick out banks that didn’t meet the membership requirements.Phase 2According to Shargiil Bashir, the sustainability head at First Abu Dhabi Bank who is currently serving as head of the NZBA’s steering group, this marks a second stage of the body’s work.“Before the NZBA was set up [in 2021], no bank had set targets aligned with the Paris Agreement,” Bashir told me, adding that more than 100 banks had now done so. “Now, the next phase is about how do we go from targets to implementation?”He argued that authorities in many major economies had now introduced regulations around climate-related financial disclosures, reducing the need for mandatory requirements from the NZBA. And despite the removal of the formal accountability mechanism, he stressed that all members would still be expected to publish climate targets and transition plans, and could be removed by the steering group for persistently failing to meet the commitment statement pledge.The body would now have a new focus on “capacity building” and knowledge sharing, Bashir said, including on driving progress among members from developing countries. “We know that some of the geographies’ pathway to net zero looks different,” Bashir added.A different animalSome sort of change of course at the NZBA had become inevitable. As the likelihood of limiting global warming to 1.5C has shrunk, the financial tensions for banks committing themselves to pursuing that target were becoming increasingly difficult. A rush of exits by US institutions, triggered in part by Trump’s re-election, threatened to become a global exodus. And the existing membership requirements had clearly weighed on sign-ups from developing countries, which have so far accounted for a disproportionately small proportion of NZBA members.The NZBA should now be seen mainly as a forum for discussion and cooperation, rather than a body that sets and enforces standards around ambitious climate action. That creates an opportunity for other bodies to play an expanded role — including the Science Based Targets initiative, which last month gave its stamp of approval to targets set by the Netherlands’ ING, the first such accreditation it has given to a major international bank.The NZBA’s policy shift may yet give a boost to its global reach — but banks seeking a rigorous benchmark for best-in-class climate ambition will need to look elsewhere.Smart readsAt the table The OECD secretary-general said the US government was engaging in efforts to negotiate a global tax deal.Staying the course Why has oil major TotalEnergies stuck to its green energy investment plans, while rivals BP and Shell have pulled back?Risk off Accounting group PwC has pulled back from more than a dozen countries as it seeks to reduce the risk of scandals.Recommended newsletters for youFull Disclosure — Keeping you up to date with the biggest international legal news, from the courts to law enforcement and the business of law. Sign up hereEnergy Source — Essential energy news, analysis and insider intelligence. Sign up here More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe plaque that honours David Ricardo in Bloomsbury seems almost designed to be walked past unnoticed. The nearby statue of his fellow free-trader Richard Cobden has become a popular latrine with the local bird population. And so a visual metaphor — about the soiled, neglected idea of trade — would have begun this column a few weeks ago.Now? The Ricardian cause has no lack of friends. These include: financial markets, which have judged that Donald Trump’s tariffs will destroy wealth, or stop it being created; the Chinese embassy in Washington, which quotes Ronald Reagan’s case against protectionism back at his party; and, most tellingly, the left, which has chosen not to defend the tariffs as a reassertion of the state. In taking such a welcome stand on this issue, progressives may not realise quite how much is being admitted — the sanctity of price competition, for instance — but let’s not scare them off.For the first time since the crash of 2008, globalisation has the high ground. It is those striving to undo it who are on the moral and intellectual defensive. Protectionism has turned out to be something of a fair-weather cause: popular as long as no one has to make a material sacrifice.Granted, moral and intellectual victories are worth only so much if tariffs keep escalating in tit-for-tat reprisals between the US, China and the EU. Winning the argument is small consolation for losing the world. But real events tend to follow, after a lag, the tide of ideas. “Liberation day” was the result of a decade or more in which free-traders lost all confidence.It matters, therefore, that old liberal verities are sayable again. Running a current account deficit is not failure. Workers are also consumers. Protectionism is a charter for lobbyists. (Look at the carve-outs for consumer electronics.) While no guarantee against war, trade can intertwine once-hostile states. (The Cobden statue was part-funded by Napoleon III.) An alternative timeline in which the US somehow smothered China’s industrial rise has to include higher retail prices: in fact, the possibility that the conquest of inflation in the 1990s never happened. Above all, don’t accord a spurious credibility to “limited” tariffs, such as the Joe Biden administration’s “small yard with a high fence”. No state gets to decide if the rest of the world retaliates.This change in the intellectual atmosphere should affect how governments behave over time. So should the humbling of a second protectionist president in a row. After the electoral flop of Bidenomics, it is Trump’s turn to misread the working class as people pining to do the manual jobs of their forebears. It takes a college degree to believe this patronising foolery, which the comedian Dave Chappelle has countered better than most. (“I want to wear Nikes, not make them.”) What is a “worker” in 2025? A sales rep with a sideline as a gig driver, probably, whose main exposure to trade is the purchase of cheap products. While 80 per cent of Americans want more factories, 25 per cent aspire to work in them. Physical labour for thee, but not for me. Will a third straight president make the protectionist error? It is slightly harder to imagine than it was at the start of the month. That is Trump’s unwitting gift to globalisation.Trade should be a popular, even populist cause, as the Anti-Corn Law League was in the 1800s. The word “globalist” should be high praise. If world leaders aren’t ready to go quite that far, they should at least hold off on all the talk of a post-global era, which the well-meaning premiers of Canada and Singapore have fanned. Trade as a share of world output is stuck where it was on the eve of the crash. But it is higher than it was at the millennium, at which point it was twice as high as in 1970. It could be a plateau of trade that we are living through, or a transient dip, and from a historically high baseline. (What is true of trade is true of the other half of liberalism: political freedom. The number of democracies is down, but from a level that was scarcely imaginable in the 1970s.) Don’t crown protectionists with victories that haven’t been earned yet.If globalisation has newly vocal friends, the relief should be mixed with a sense of waste. The time to speak up was years ago. Instead, rational people went along with tariffs because a Democratic president was levying them. It is still all too easy in bien pensant company to raise pantomime boos with talk of “neoliberalism”. Even the premise of that word is false. It just isn’t the case that Reagan, Thatcher and their heirs abandoned people to global market forces. In the US and UK, but also Australia, France and beyond, social spending was higher as a share of GDP in 2008, and now, than in 1980. The lesson? Liberals tend to choose feeling good over thinking hard. In the culture wars, what allowed woke-ism to go as far as it did was not the zealots who were steeped in critical theory. These were few in number. It was the failure of those nearer the centre — who couldn’t abide being seen as big meanies — to stand up to them. Something similar has enabled protectionism to gain ground since the crash. Aching to be seen as good and chastened people, liberals have indulged all manner of economic nonsense. Even now, I suspect many are only banging the drum for trade because it is Trump on the opposing side. As a service to the cause, his is unintentional, but no less statue-worthy for [email protected] More

Stay informed with free updatesSimply sign up to the More

Stay informed with free updatesSimply sign up to the More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT. The Trump administration is clamping down on Nvidia’s ability to sell AI chips to China, sending its shares sliding in after-hours trading. We’ll explain the move and bring you more reaction to it. Here’s what else we covering today: Jamie Dimon on the risks of eroding US credibility China’s first-quarter growth beats expectationsPrivate equity groups pause dealmakingTurkey’s opposition leader writes from his prison cell And the rise of the “it” smoothieSilicon Valley chip giant Nvidia was forced to take a $5.5bn hit to its earnings last night after the US government introduced new controls on its ability to sell artificial intelligence chips to China. The move sent Nvidia’s shares down 7 per cent and has knocked sentiment across the tech sector. Here’s what you need to know.What are the new restrictions? The chipmaker said its H20 chip, which is tailored to comply with Biden-era export controls that already prevent the sale of its most powerful chips in China, would now require a special licence to be sold to Chinese customers. The company did not say how many licences would be granted but said the H20 licence requirement would “be in effect for the indefinite future”. Bernstein analysts said yesterday that the H20 accounted for about $12bn of Nvidia’s $17bn in China revenues over the past year.Why has the US unveiled these new measures? The US said the new controls were necessary to address the risk of H20 chips being used in “a supercomputer in China”, Nvidia said in its filing. The US government is worried China will be more successful building supercomputers, which can be used for everything from the development of hypersonic weapons to modelling for nuclear weapons, to help the People’s Liberation Army.Are any other companies affected? As well as issuing new export licensing requirements for Nvidia’s H20 chip, the US commerce department issued new licences for AMD’s MI308 and equivalent chips. AMD is Nvidia’s closest direct competitor in the AI data centre chip market and its shares were down 7 per cent in after-hours trading. Broadcom, whose custom AI chips are sold to customers including China’s ByteDance, also fell in after-hours trading although it was unclear whether Broadcom’s chips would be affected by the new measures. In Europe, the shares of Dutch chipmaking equipment company ASML sank 6 per cent while in Hong Kong lead AI chip buyer Alibaba was down nearly 4 per cent and Baidu and Tencent were both down about 2 per cent. Here’s the latest on the share price moves. Join our live Q&A today on the changing trade, economic and geopolitical relationship between the US and its allies. And here’s what else we’re keeping tabs on today:Monetary policy: All eyes will be on The Economic Club of Chicago later today where Federal Reserve chair Jay Powell is scheduled to share his views on the economic outlook for the US.Economic data: March retail sales are published in the US as well as industrial production figures. The World Trade Organization publishes its annual global trade outlook, including a 2025 growth forecast.Company earnings: Abbott Laboratories and Travelers are expected to report first-quarter results. In the financial sector, Citizens Financial Group and US Bancorp also publish results for the period ending March 31.Five more top stories1. China’s economy grew at a robust 5.4 per cent in the first quarter of this year as producers front-loaded exports to beat a blitz of tariffs from Donald Trump’s administration. The strong first-quarter growth exceeded Beijing’s full-year target for 2025 as well as the 5.1 per cent forecast by analysts in a Reuters poll. 2. Trump has signed an executive order aimed at lowering drug prices for Americans by instructing regulators to allow more states to import medicines directly from countries with lower prices. With the US paying over three times more for branded drugs than other developed countries, the move will shake up the pharmaceutical industry in its biggest, most profitable market.3. PwC has ceased operations in more than a dozen countries that its global bosses have deemed too small, risky or unprofitable, including cutting ties with several member firms in francophone Africa. Stephen Foley has more details on the Big Four firm’s push to avoid further scandals.4. The US is engaging in efforts to negotiate a landmark global tax deal despite Trump’s criticism of the agreement, according to the OECD’s chief. Secretary-general Mathias Cormann told the FT the talks included technical concerns on how to implement reforms aimed at closing loopholes for Big Tech and multinationals, in a sign the US could back the deal.5. Donald Trump’s tariffs are forcing private equity groups to pause their dealmaking and focus on managing their existing portfolio companies, executives in the industry have told the Financial Times. The comments are a stark reversal of earlier expectations for a boom in activity under the new administration. Here’s what private equity executives told the FT.Today’s big interviewJamie Dimon said the US’s economic pre-eminence could come under threat from the president’s attempt to reshape global trade Donald Trump’s trade war risks eroding the US’s credibility, Jamie Dimon has told the Financial Times. The JPMorgan Chase chief executive said that the US remained “a haven” because of its prosperity, rule of law and economic and military strength, but that America’s economic pre-eminence could come under threat from the president’s attempt to reshape global trade. Read more of Dimon’s comments here and watch the interview in full.We’re also reading . . . Chart of the dayThe story of the English-speaking peoples, including the US, has been one of taming arbitrary power, writes Martin Wolf. Replacing tyranny with the rule of law, the role of courts in determining that law and that of the legislature in making it serves both moral and practical goals. Only in such a state can people feel safe against despotism, he adds. The Trump trade wars are a demonstration of the dangers of unchecked power. We have also been given an object lesson in the economic costs.Take a break from the newsToday, health is wealth. The boom in wellness — from sleep aids and snacks to fitness tourism — is worth $7tn globally, according to the Global Wellness Institute. The latest accessory being brandished by 20-somethings isn’t a designer bag — it’s a made-to-order protein smoothie in a branded cup.Members’ club Soho House offers photo-friendly protein shakes in its branded cups More

I was drawn to the outskirts of Cairo by the colossal complex in the desert — a towering site that arose over decades, built at unimaginable expense, with precisely cut stones sourced from local quarries; a set of buildings whose construction, plagued by extraordinary challenges, spanned the reigns of several rulers; a collective cultural testament, the largest of its kind, teeming with royal history.No, I’m not referring to Giza’s famous pyramids. I came to see the Grand Egyptian Museum.Approaching the museum’s main entrance. (The plaza contains an obelisk that is elevated on a granite base, allowing for views of the cartouche — an oval containing a royal name in hieroglyphics — of Ramses II.)Hieroglyphic motifs and translucent stone adorn the building’s exterior.A pyramidal entryway leads to the grand atrium.There is perhaps no institution on earth whose opening has been as wildly anticipated, or as mind-bogglingly delayed, as the Grand Egyptian Museum outside Cairo. Its construction has been such a fiasco — mired by funding lapses, logistical hurdles, a pandemic, nearby wars, revolutions (yes, plural) — that it begs comparison to that of the pyramids that lie just over a mile away on the Giza Plateau.(The 4,600-year-old Great Pyramid of Giza, built from around 2.3 million stone blocks and without the use of wheels, pulleys or iron tools, took about 25 years to build, by some estimates. So far, the Grand Egyptian Museum has taken more than 20.)Planned openings have come and gone since 2012. (Even The Times got it wrong; our list of 52 Places to Go in 2020 prematurely referred to the “fancy new digs for King Tut and company.”) In time, frustrations bubbled over for would-be visitors, many of whom had planned vacations around the new museum. “I have canceled two trips to Cairo because of anticipated opening dates and then delays,” one traveler wrote on the museum’s Instagram page this year. “I have wanted to visit since I was a child and the promise of the museum and constant delays is ruining that experience for so many people.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. We finally had a calm day in markets. The S&P 500 was down less than 0.2 per cent yesterday. Most sectors fell, but only by a little, while info tech and a mix of defensives saw modest rises. How long will that last? Rob is off on holiday, so email me instead: [email protected]. If you have questions about trade we have not answered on Unhedged, please join our colleagues senior trade writer Alan Beattie, US markets editor Kate Duguid and chief foreign affairs commentator Gideon Rachman for a live trade Q&A today at 10am ET/3pm BST. Leave your questions here.Emerging marketsUnhedged had suspected that emerging market equities would be hit especially hard by Trump’s “liberation day” tariffs. More than half of Trump’s so-called reciprocal tariffs were on EMs, and EM equities tend to underperform in broader risk-off environments. The strongest EMs, particularly tech-heavy countries in south-east Asia, were hit with some of the highest tariffs. And EM assets tend to strain when the dollar strengthens — which, we were told, would happen after US tariffs took effect. That turned out to be wrong. While both the MSCI emerging markets index and the MSCI emerging markets index excluding China fell hard in the first few days after the tariffs, MSCI emerging markets ex China did not fall as sharply as the S&P 500. And both have outperformed the S&P 500 since April 2:There are a few potential explanations. While the market’s fall immediately after “liberation day” was a risk-off event, the storm was most severe in the US. That may have been from investors locking in their gains from years of US outperformance. Or it could have been emblematic of something worse — a flight from American capital towards other countries’ assets, as suggested by the fall of the dollar alongside rising Treasury yields.Trump’s “reciprocal” tariffs — and his eventual pause — was also a positive surprise for some EM investors. There was already some EM weakness priced in going into “liberation day”; according to the Institute of International Finance, portfolio flows to emerging market equities fell sharply in March — particularly flows to China ($9bn outflow), but also flows to most other EM countries. However, with the exception of China, EMs have not been the focus of Trump’s policies, or so says Thierry Wizman of Macquarie Capital:By dint of luck [such as not having big car industries], or because they have low trade with the US, many EMs — particularly in Latin America — got off pretty well after “liberation day” . . . That they are really off of Trump’s radar screen is perceived as a net benefit by investors.Though the EMs in China’s periphery such as Thailand, Cambodia and Vietnam were hit particularly hard, Trump’s 90-day pause and his exemption of electronics tariffs has given those countries’ equities a boost, at least for now.But, as is always the case with diverse EMs ranging from developed economies such as Taiwan to relatively poor countries such as Nigeria, there has been a range of outcomes. The outlooks have differed, too — and have changed radically since Trump paused his ‘reciprocal tariffs’, and doubled down on China. Some countries stand to benefit from the growing rift between the US and China, and their equity indices have been lifted further by Trump’s recent focus on Beijing. Indian manufacturers hope to fill the void of cheap goods flowing to the US, and countries such as Brazil and South Africa can satiate some of China’s demand for non-US agriculture. Others may struggle if China languishes. For example, equities in countries in Latin America that rely on Chinese investment — including Peru and Argentina — have either fallen or just barely beaten the broader emerging markets ex-China index since Trump’s reversal. And with falling oil prices and what many fear will be slowing global energy demand, oil exporters such as Saudi Arabia have underperformed:Some content could not load. Check your internet connection or browser settings.But, broadly speaking, EM equities look better positioned than we would have expected. The picture is similar for fixed income. Spreads between emerging market bonds and safer assets have widened only modestly since the middle of March. Meanwhile, US high-yield spreads have stretched dramatically, indicating a bigger sell-off of riskier US debt than EM bonds:It is tempting to say that EM strength — on both the equity and fixed-income sides — is a sign of the end of American exceptionalism. Indeed, many EM countries have benefited from the falling dollar, which has strengthened their currencies in comparison and made it easier for sovereigns and local corporations to service their debts. And the pick-up in US high yield, above and beyond EM spreads, is particularly concerning. But Unhedged will not go that far yet. Though EM outperformance could be a sign of shifting global capital flows, equity outperformance has been marginal and varied, and we still do not have the full flows data from the first half of April. And other indicators of a shifting global regime have not been strong enough to draw any conclusions: US Treasury auctions have been fine, and we have not seen other obvious signs of a drawback by foreign buyers.On the EM fixed-income side, as William Jackson at Capital Economics notes, there is also a lot of variation:[Spreads for] major EMs [have only widened] around 10 to 20 basis points since ‘reciprocal tariffs’ were first announced; they’ve risen further in some oil producers (Gabon, Angola, Iraq) and some EMs where concerns over debt distress are high (Bolivia, Kenya, etc)And some of the gap between spreads in the US and EMs is down to divergent paths for monetary policy. Various EMs have successfully tamed inflation, and are likely to cut their policy rates in the coming months to fight off a potential global slowdown. Meanwhile, the monetary policy outlook for the US remains unclear. We are still in the early stages of the post-“liberation day” fallout, too. ‘Reciprocal tariffs’ — or something more dire — could still be applied to imports from EMs after 90 days, making them worse off by comparison. Trump’s tariffs also matter more for the US than they matter for most EMs; US businesses are dealing with uncertainty on all fronts, whereas EM companies and sovereigns are just contending with potentially slower growth and their changing relationship to the US and China. More clarity in the US — and lower tariff barriers (we hope) — could lift American assets again. One good readADHD.FT Unhedged podcastCan’t get enough of Unhedged? Listen to our new podcast, for a 15-minute dive into the latest markets news and financial headlines, twice a week. Catch up on past editions of the newsletter here.Recommended newsletters for youDue Diligence — Top stories from the world of corporate finance. Sign up hereFree Lunch — Your guide to the global economic policy debate. Sign up here More

China’s economy grew a robust 5.4 per cent in the first quarter of this year as producers frontloaded exports to beat a blitz of tariffs from US President Donald Trump that threatens to decouple the world’s two largest economies.The official GDP figures, released by China’s National Bureau of Statistics on Wednesday, matched the year-on-year growth rate in the fourth quarter despite Trump’s first salvo of additional 20 per cent tariffs taking effect.The growth exceeded Beijing’s full-year target for 2025 as well as the 5.1 per cent forecast by analysts in a Reuters poll.But economists expect China’s economy to come under pressure as the full US levies take force.The economy had a “good start” in the first quarter, said NBS deputy commissioner Sheng Laiyun.But he warned that “the current external environment is becoming increasingly complex and severe, the driving force for domestic effective demand growth is insufficient and the foundation for the economy to continue its rebound and improvement still needs to be solidified”.Some content could not load. Check your internet connection or browser settings.Chinese markets declined, with Hong Kong’s Hang Seng index falling 2.5 per cent while mainland China’s CSI 300 index shed 0.9 per cent. The renminbi weakened 0.15 per cent to Rmb7.326 a dollar.China on Wednesday rejigged its trade negotiating team ahead of potential talks with the US over tariffs, naming its representative to the World Trade Organization, Li Chenggang, as its top official.Li, who was educated partly in Germany, is replacing Wang Shouwen, who served in the role from July 2022.Li “is a lawyer by training, which positions him better than Wang Shouwen to handle the complex legal issues that are emerging in the current negotiations”, said Henry Gao, professor of law at Singapore Management University.The change “demonstrates China’s willingness to delve into legal intricacies during negotiations, suggesting a strategic approach to resolving the ongoing trade war”, he added.Beijing has set what analysts have described as an ambitious growth target of 5 per cent for this year, which policymakers have pledged to back with stimulus measures, funded by a record budget deficit target for the central government.But economists have downgraded their forecasts in the wake of Trump’s trade war, with Morgan Stanley cutting its estimate for China’s 2025 GDP growth from 4.5 per cent to 4.2 per cent. UBS projects the economy will grow just 3.4 per cent, and Goldman Sachs forecasts 4 per cent growth.“China needed to get off to a strong start in the first quarter to have any chance of hitting the full-year target,” said Lynn Song, ING’s greater China chief economist.Higher industrial production in the first quarter could “also partly [be] due to just frontloading” exports to the US, he added, “so we’ll have to see how the next couple months unfold”.Goldman analysts said they expected “China’s sequential growth to fall meaningfully” in the second quarter “due mainly to the strong headwinds from increased US tariffs and potential payback effects from previous export frontloading”.Some content could not load. Check your internet connection or browser settings.Trump has imposed a total of 145 per cent additional levies on Chinese goods, although he granted what he said would be temporary exemptions on products such as smartphones and electronics. China has responded with retaliatory duties of 125 per cent.Beijing and Washington stepped up their rhetoric in the trade stand-off this week. Trump on Tuesday said China “needs to make a deal with us”.“We don’t have to make a deal with them,” he added. “They need our money.”Later, he said “the ball is in China’s court” to start talks.But Xia Baolong, director of the Hong Kong and Macao Affairs Office, said China would not be intimidated.“The Chinese people have persevered through hardships, and anyone who attempts to drag us back to a state of poverty and weakness is our enemy,” he said.The Chinese growth figures come as households struggle to recover from a deep property slowdown that has damped consumer sentiment and domestic demand.The NBS on Wednesday said retail sales rose 5.9 per cent last month against a year earlier, beating the average analyst forecast of 4.2 per cent and a reading of 4 per cent for the January-February period.March industrial production was up 7.7 per cent from 5.9 per cent in January-February, also beating analysts’ forecasts.In the face of deflationary pressures from weak household demand, Chinese policymakers have leaned on manufacturing and exports to drive growth. The country reported a record global trade surplus last year of nearly $1tn despite increasing tensions with its trading partners.Figures released on Monday showed exports rose 12.4 per cent in dollar terms in March on a year earlier, the biggest rise since October, while imports fell 4.3 per cent.NBS’s Sheng said the rapid growth in exports despite the increase in tariffs and trade restrictions since February demonstrated China’s “resilience”.“We have a rich toolbox of policy options, ensuring that we can respond to external shocks and challenges,” he said.Data visualisation by Haohsiang Ko in Hong Kong More