China's economic growth gathered pace in the third quarter as rapid export expansion, driven by the boom in artificial intelligence, offset weakness in retail spending and investment.
GDP (Gross Domestic Product) grew 4.5% in the three months to September compared to the same period the previous year, exceeding the median forecast of 4.4% from analysts surveyed by Bloomberg. The result came after an expansion of 4.3% in the previous three-month period, one of the lowest rates in recent years.
In the first nine months of the year, up to September, economic growth was 4.6%, reported the NBS (National Bureau of Statistics) this Monday (19), thanks to a stronger pace in the first quarter. China's official GDP target for the year is an increase of 4.5% to 5%.
"This will likely keep the year's growth target within reach," said Lynn Song, chief economist for Greater China at ING.
Mao Shengyong, deputy director of the NBS, noted that although the third quarter's growth rate was among China's lowest in decades, with the exception of the Covid-19 pandemic period, it was one of the strongest among the world's largest economies.
According to him, this occurred despite a "complex and constantly changing" international environment and "insufficient domestic demand". "The basis for stable and improving economic performance still needs to be consolidated," he admitted.
The Chinese leadership faces a two-speed economy: the AI boom and investments in high-tech industries and manufacturing drive exports, while the prolonged real estate crisis weakens domestic demand.
Exports grew 36% last month, in dollars, in the annual comparison. But the rapid increase in the trade surplus, which is expected to surpass the record of US$ 1.2 trillion (R$ 6.09 trillion) registered last year, has generated friction with trading partners, especially with the European Union.
Brussels and Beijing agreed this month to set a quota for imports of Chinese hybrid cars into the bloc, avoiding a large-scale trade conflict. Still, the EU is expected to adopt further safeguard measures to protect manufacturing industries and jobs in the face of competition from low-cost Chinese rivals.
China's industrial production continued to grow in September, rising 5.5% year-on-year, in line with forecasts and above the 5.2% expansion recorded in August.
Retail sales, seen as an indicator of consumption, increased 1.1% last month compared to the same period a year earlier, above August's 0.4% and analysts' forecast of 0.5% growth.
ING's Song said higher-than-expected retail sales were partly due to increased sales of "communication gadgets" such as phones and other devices for which the government offers subsidies.
Chinese authorities have vowed to do more to stimulate domestic demand as the property sector slowdown, now in its fifth year, has shaken household confidence.
New residential property prices in 70 cities fell 0.14% in September compared to the previous month, excluding state-subsidized housing. This represented a slight improvement from the 0.17% drop recorded in August compared to July, according to NBS data.
"The key macroeconomic message is that the Chinese economy continues to be driven by the supply and production side," commented Yuhan Zhang, principal economist at the Conference Board's China Center.
"This supports short-term growth and industrial modernization, while continued efforts to strengthen household consumption, demand for services and consumer confidence would make the recovery more balanced and sustainable," he assessed.
Zhang said investment data shows China's growth increasingly depends on what the government calls "new productive forces," especially advanced manufacturing.
"Equipment manufacturing and high-tech industries remain strong because solid industrial policy support at the central level encourages investment in strategic sectors," Zhang said.
Fixed asset investment fell 7.2% year-on-year in the first nine months of 2026, in line with the 7.2% contraction recorded through August, but slightly better than analysts' median forecast of a 7.3% decline.
