China’s economy grew faster in the third quarter, helped by strong demand for chips and electronics tied to the global artificial intelligence boom. Weak spending and investment at home continued to hold back growth.
The National Bureau of Statistics said on Monday that the economy grew 4.5% from a year earlier in the three months to the end of September. That was up from 4.3% in the second quarter, which was the slowest pace in more than three years.
The figure sits at the bottom end of Beijing’s annual growth target of 4.5% to 5%. Growth was 5% in the first quarter, and the economy expanded 4.6% over the first nine months of 2026.
Exports Lead China’s Growth
Trade remained the main driver of the economy. China’s exports jumped 36.3% in September from a year earlier, the biggest rise since early 2021, customs data showed.
Exports to the United States rose 39.6% in September. AI-related goods and green technology products, such as batteries, made up most of the gains.
China’s trade surplus reached $938.1 billion in the first nine months of the year, up from $875.1 billion in the same period of 2025. It is on track to pass last year’s record of $1.2 trillion.
Sales of high-tech goods rose 14.3%. Production of batteries and industrial robots each grew by more than 29%.
Weak Demand at Home
The property market, now in its fifth year of decline, continued to weigh on the economy. Property investment fell 20.2% in the first three quarters. About 70% of Chinese household wealth is tied up in property.
Fixed-asset investment, which covers spending on infrastructure, factories and property, fell 7.2% in the first nine months compared with the same period in 2025.
Retail sales showed some improvement. They rose 1.1% in September, up from 0.4% in August and the fastest growth since March.
Sheana Yue, a researcher at Oxford Economics, said there are still no signs the property slump will end soon. She added that trade uncertainty has made Chinese consumers more pessimistic and less willing to spend.
Dave Chia, an economist at Moody’s Analytics, said the effects of Beijing’s targeted support have yet to be seen. He pointed to China’s reliance on a “single external engine” in exports as a risk.
Mao Shengyong, vice-minister of the statistics bureau, said the economy “moved forward under pressure.” He also said “the problem of insufficient domestic demand remains relatively prominent.”
In September, Beijing announced limited stimulus measures. These included mortgage subsidies for first-time home buyers and lower interest rates for some businesses.
Last week, the International Monetary Fund cut its 2026 growth forecast for China from 4.6% to 4.5%, citing weak domestic demand. It also lowered its 2027 forecast from 4.1% to 4%.
China’s exports have drawn criticism from the US and the European Union, where manufacturers face competition from cheaper Chinese goods.
This month, Beijing and Brussels reached an initial trade agreement that includes a cap on China’s hybrid vehicle exports to the EU.
Last month, Xi Jinping and Donald Trump extended their trade truce to January and agreed to tariff cuts on $60 billion worth of goods. The two leaders are expected to meet again in November at the APEC summit in Shenzhen.
