KEY POINTS
- China’s economy expanded by 4.5 per cent year-on-year in the third quarter of 2026, up from 4.3 per cent in the previous quarter.
- The economy grew by 4.6 per cent in the first nine months of the year.
- Fixed-asset investment fell 7.2 per cent, while property investment declined 20.2 per cent over the first three quarters.
- Retail sales growth improved to 1.1 per cent in September, from 0.4 per cent in August.
- The IMF lowered its 2026 growth forecast for China to 4.5 per cent.
MAIN STORY
China’s economy grew by 4.5 per cent year-on-year in the third quarter of 2026, as strong exports supported activity despite continued weakness in domestic demand and investment.
Data from China’s National Bureau of Statistics showed that growth improved from 4.3 per cent in the second quarter. The latest figure met the lower end of the government’s full-year growth target of between 4.5 per cent and 5 per cent.
For the first nine months of the year, China recorded economic growth of 4.6 per cent.
Exports have been a major source of support, particularly shipments of artificial intelligence-related electronics, components and green technology products. Chinese customs data showed that exports rose 36.3 per cent year-on-year in September, while exports to the United States increased by 39.6 per cent.
The export performance contributed to a trade surplus of $938.1 billion in the first nine months of 2026, compared with $875.1 billion over the same period in 2025.
However, investment remained weak. Fixed-asset investment, which includes spending on infrastructure, factories and property, fell 7.2 per cent in the first nine months compared with the corresponding period last year.
Property investment declined by 20.2 per cent over the same period, reflecting continued pressure on China’s real estate sector, which has been in a prolonged downturn.
Consumer spending showed some improvement. Retail sales, a measure of consumer activity, increased by 1.1 per cent in September, compared with 0.4 per cent in August. The September figure was the strongest growth recorded since March, according to the supplied report.
Mao Shengyong, vice-minister of China’s National Bureau of Statistics, said the economy had continued to progress despite pressure, while warning that weak domestic demand remained a concern.
China’s government has prioritised expanding domestic demand in 2026. Measures announced in recent months include mortgage subsidies for first-time homebuyers and targeted interest rate cuts.
The International Monetary Fund also reduced its growth forecast for China in 2026 from 4.6 per cent to 4.5 per cent. Its projection for 2027 was lowered from 4.1 per cent to 4 per cent, with persistent weakness in domestic demand cited as a key concern.
THE ISSUES
China’s latest figures highlight the contrast between strong export performance and weaker activity within its domestic economy.
Overseas demand for technology-related products has helped sustain manufacturing and economic growth. However, falling investment and the prolonged property downturn indicate that the recovery remains uneven.
The property market is a particular concern because it represents a significant part of household wealth. Continued weakness in the sector could affect consumer confidence and spending, making it harder for domestic demand to become a stronger source of growth.
China’s growing trade surplus also places its export performance in the context of trade relations with major economies. While exports have supported growth, increased shipments of Chinese manufactured goods have contributed to trade tensions with the United States and the European Union.
WHAT’S BEING SAID
“The economy moved forward under pressure and developed in a newer and better direction, with an increase in positive changes in key indicators.” – Mao Shengyong, Vice-Minister of China’s National Bureau of Statistics
“At the same time, we must also recognize that the international environment is complex and volatile, the problem of insufficient domestic demand remains relatively prominent, and the foundation for the steady and positive growth of the economy still needs to be consolidated.” – Mao Shengyong, Vice-Minister of China’s National Bureau of Statistics
“Sluggishness in domestic consumption and weakening investment amid continued property sector strains were only partly offset by robust export performance.” – International Monetary Fund
WHAT’S NEXT
China’s fourth-quarter performance will help determine whether the country can meet its annual growth target and whether further support will be needed to sustain economic activity.
Key indicators to watch include domestic consumption, fixed-asset investment and the property market. The effectiveness of measures intended to encourage home purchases and improve access to credit will also be important.
Trade relations remain another factor. China and the United States have extended their trade truce to January 2027 and agreed to tariff reductions on $60 billion worth of goods. China and the European Union have also reached an initial trade agreement that includes a cap on Chinese hybrid vehicle exports to the EU and measures to improve market access.
BOTTOM LINE
China’s 4.5 per cent third-quarter growth was supported by strong exports, particularly in technology-related products. However, declining investment and persistent weakness in domestic demand remain significant challenges. The figures point to an economy that continues to rely heavily on overseas markets while efforts to strengthen domestic spending remain a priority.
Source: CNN rBusiness
