China’s economy gained speed in the third quarter, growing 4.5% from a year earlier and beating forecasts. The figures from the National Bureau of Statistics, published Monday, also showed a pickup in retail sales. Even so, analysts say the recovery remains uneven and heavily dependent on exports.
The numbers
Gross domestic product growth topped the 4.4% forecast in a Reuters poll and improved on the 4.3% of the second quarter, which had been the weakest in more than three years. On a quarterly basis, the economy expanded 1.2%, ahead of the 1.1% analysts expected and up from 0.9% in the previous three months.
For the first nine months of the year, growth was 4.6%. That sits inside the government’s full-year target of 4.5% to 5%, though reaching the upper end will require a strong final quarter.
Consumers show a flicker of life
Retail sales rose 1.1% in September from a year earlier. That was better than the 0.4% of August and above forecasts of roughly 0.5%, and the fastest pace since March. Excluding car purchases, sales growth was 3.9%, the best since October last year. Industrial output rose 5.5%, slightly ahead of expectations.
The picture is less encouraging in other areas. Fixed-asset investment is down 7.2% for the year so far, and the property sector shows few signs of stabilising. Some analysts point to a steep fall in property investment as the most serious drag.
A two-speed economy
Beijing has leaned heavily on exports this year, but that engine faces growing pressure as trade tensions with the European Union escalate. Reuters described the result of years of redirecting credit away from property and toward high-technology industries as a two-speed economy. Strong factory output and exports, helped by demand for AI-related goods, are masking weak household spending and cautious private investment.
One analyst quoted by Reuters said growth is led by exports and the state, domestic demand is not yet able to sustain itself, and the property market has not found a floor.
What it means for stimulus
The stronger data reduces the urgency for broad stimulus measures. Another analyst said the GDP beat and the retail surprise lessen the case for immediate wide-ranging easing. Earlier this month the International Monetary Fund cut its 2026 growth forecast for China to 4.5%, the bottom of Beijing’s target range. A Reuters poll sees growth of 4.5% this year, down from 5.0% in 2025, and 4.4% in 2027.
For policymakers, the challenge is to support households without reigniting a property bubble, and to reduce reliance on foreign demand just as trade frictions rise. Targeted measures, such as help for consumption or housing, look more likely than a large, across-the-board package.
Markets and the world economy
Chinese shares edged higher after the release, and Asian markets as a whole were more focused on concerns about AI funding. For the rest of the world, a steadier China is a mild positive for commodity demand and global growth. Slower stimulus could also limit upward pressure on commodity prices, which matters for importers already facing high energy costs.
What to watch
The fourth quarter will decide whether China lands within its target. Key indicators include export orders, retail sales during the coming holiday-shopping season, new-home sales and any policy signals from the government. Developments in trade talks with the EU will be closely watched, because new tariffs could take the shine off the export engine.
