China's economy grew 4.5% year-on-year in the third quarter of 2026. Strong exports and industrial production offset weak consumer spending, a drop in investment and an ongoing housing crisis. The data exceeded the 4.4% forecast in a Reuters poll and showed an acceleration from 4.3% growth in the second quarter.
On a quarterly basis, gross domestic product increased 1.2% in July-September, compared with 0.9% in the previous quarter. The economy grew 4.6% in the first nine months, well within Beijing's annual target of 4.5% to 5%.
Exports offset weak domestic spending
China's exports rose 36.3% in September from a year earlier. The trade surplus for the January-September period reached $938 billion, putting the country on track to surpass the record $1.2 trillion it will hit in 2025.
Semiconductors, cars, electric vehicles, hybrid cars and goods related to artificial intelligence are among the main drivers. Chinese manufacturers are increasingly targeting markets in Southeast Asia, Latin America and Europe after U.S. tariffs curbed some trade with the United States.
“China's exports are constrained in a more protectionist international environment“, said Michel Lam, an economist at Societe Generale, quoted by Reuters. According to her, without a decisive change in policy to support income and consumption, the country could remain in a period of low inflation and weaker growth.
Industry grows, but investment shrinks
Industrial production increased by 5.5% in September, the fastest pace in six months. Retail sales rose 1.1%, but consumption remained significantly weaker than industrial activity.
Fixed-asset investment shrank 7.2% in the first nine months, and real estate investment fell 20.6%. It is the prolonged decline in the property sector that is reducing household wealth and encouraging them to save instead of spend.
“Insufficient domestic demand remains a significant problem“, said Mao Shenyun, deputy head of the National Bureau of Statistics. He warned that the foundation for a sustained economic recovery still needs to be strengthened.
Beijing extends support
Chinese authorities have directed 550 billion yuan of unused government debt quotas to local governments to ease their financial pressures and support infrastructure spending. Interest subsidies for small private companies and consumers have also been expanded, as has infrastructure financing.
However, the measures remain mainly focused on production and supply. The European Union and China have agreed to limit imports of Chinese hybrid cars into the EU, and Brussels is considering further restrictions due to the growing trade deficit. This raises questions about how long exports can remain the main driver of Chinese growth.
Sources: cyprus-mail.com, in.marketscreener.com, apnews.com