China’s growth quickens to 4.5% in Q3, beating forecasts

China's economy grew faster than expected in the third quarter. Gross domestic product rose 4.5% year on year in July through September, up from 4.3% in the second quarter, according to preliminary estimates from the National Bureau of Statistics released Monday, October 19. Analysts in a Reuters poll had expected 4.4%, and the second-quarter reading had been the weakest in more than three years, Reuters reported.stats.gov.cn+1

Growth for the first nine months came to 4.6%, inside Beijing's annual target of 4.5% to 5%. On a quarterly basis, GDP grew 1.2%. The result makes the annual goal more reachable and reduces the chances of further easing, Bloomberg noted.cnn.com+1

Exports and Factories Lead

Trade did most of the work. Exports jumped 36.3% in September from a year earlier, the biggest increase since early 2021, as global demand for chips, electronics components and batteries surged with the artificial intelligence boom, CNN reported. Industrial output rose 5.5% in September. High-tech manufacturing value added climbed 14.3% over the first nine months.cnn.com+1

China's trade surplus is on course to beat last year's record of $1.2 trillion. That could add to trade friction, and a recent deal with the European Union to cap Chinese hybrid-vehicle shipments may weigh on auto exports.reuters.com+1

Weak Demand at Home

Domestic indicators were still soft. Fixed-asset investment fell 7.2% in the first nine months, and property investment fell by about a fifth. Retail sales rose 1.1% in September, the fastest pace since March. The urban unemployment rate was 5.2%.cnbc.com+2

NBS vice-minister Mao Shengyong said "the problem of insufficient domestic demand remains relatively prominent," according to CNN. Last week, the International Monetary Fund cut its 2026 growth forecast for China to 4.5% from 4.6%.cnn.com

Limited Stimulus Ahead

Beijing has relied on targeted measures rather than broad stimulus. These include mortgage subsidies, targeted rate cuts and 550 billion yuan in unused local government debt quotas.reuters.com

"External demand is still keeping the economy afloat, and I think that is also why the government is not really very aggressive in the stimulus," Ho Woei Chen, an economist at UOB, told Reuters. Andy Ji of ITC Markets said hitting the target still requires a strong fourth quarter, adding that "domestic demand is not yet self-sustaining, and the property sector shows no floor."reuters.com