China’s Economy Grows 4.5% in Third Quarter, Beating Expectations as Exports Carry the Load

China’s economy picked up speed in the third quarter, growing 4.5 per cent from a year earlier and beating economists’ expectations, as a surge in exports helped offset persistent weakness in the property sector and domestic demand.

The gross domestic product figure, released by the National Bureau of Statistics (NBS) on Monday, came in above the 4.4 per cent growth forecast in a Reuters poll of analysts and marked a rebound from the 4.3 per cent recorded in the April-to-June period — the weakest pace in more than three years. On a quarterly basis, the economy expanded 1.2 per cent, also ahead of the 1.1 per cent expected and faster than the 0.9 per cent of the previous quarter, according to Reuters.

For the first nine months of the year, the economy grew 4.6 per cent — keeping it within Beijing’s annual growth target range of 4.5 to 5.0 per cent, the NBS said. Total output for the January-to-September period stood at 107.1 trillion yuan, according to the Seoul Economic Daily.

The better-than-expected reading is likely to ease pressure on Chinese policymakers to roll out aggressive new stimulus measures in the final quarter, several analysts said. “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 in Singapore, told Reuters. “Our forecast now is 4.5 per cent.”

The numbers in detail

The September data released alongside the GDP figures painted a picture of an economy running on two very different engines. Industrial production rose 5.5 per cent from a year earlier — the fastest pace since March and in line with consensus forecasts, up from August’s 5.2 per cent, according to Reuters. Retail sales, a key gauge of consumption, grew 1.1 per cent, the strongest since March and comfortably ahead of the 0.6 per cent consensus estimate, up from a meagre 0.4 per cent in August.

The contrast with the investment data was stark. Fixed asset investment for the first nine months fell 7.2 per cent from a year earlier — broadly in line with the 7.3 per cent decline forecast, but still a sharp contraction that underlines how little private money is being put to work. Property investment slid 20.6 per cent over the same period, deepening from the 19.9 per cent fall recorded in January-to-August, as the long property downturn refuses to bottom out.

Taken together, the quarter’s performance completes a rollercoaster year: growth of 5.0 per cent in the first quarter gave way to the 4.3 per cent second-quarter trough — the slowest since the final quarter of 2022 — before this quarter’s 4.5 per cent recovery, according to the Seoul Economic Daily.

Exports doing the heavy lifting

Behind the headline beat lies a familiar story: Beijing has leaned heavily on exports for growth this year, as domestic demand remains weak. China’s trade surplus widened more than expected in September as exports surged, keeping the country on track to surpass last year’s record surplus of 1.2 trillion dollars, Reuters reported.

The surplus for the January-to-September period reached 938.11 billion dollars, the Seoul Economic Daily reported, and some forecasts suggest the figure could pass the 1 trillion dollar mark as early as with the release of October data. Last year’s surplus stood at 1.1889 trillion dollars. Strong overseas demand linked to the global artificial intelligence boom has been a key support, even as friction with major trading partners — including the European Union — continues to escalate.

A deal with the EU to rein in Chinese hybrid-vehicle shipments could weigh on the booming auto trade, Reuters noted — a reminder that the export engine faces political headwinds of its own.

A two-speed economy

China’s strategy of redirecting credit and resources away from the property sector and towards high-tech industries has created what economists describe as a two-speed economy: strong factory output and exports are masking weak consumption and private investment, Reuters reported.

Authorities have recently expanded support for home buyers and unveiled measures to steer cheaper credit into sectors including infrastructure and technology. They also allocated 550 billion yuan — about 82.28 billion dollars — in unused government debt quotas to ease local governments’ financial strain and expand infrastructure investment, according to Reuters. Even so, Beijing has so far refrained from the kind of large-scale, broad-based stimulus that markets periodically speculate about.

The yuan traded at about 6.69 to the dollar alongside the data, per the Reuters report.

Markets digest the data

The figures landed as global investors juggled a raft of competing narratives. London stocks fell in early trade on Monday as investors digested the Chinese data and looked ahead to a slew of US tech earnings this week, according to Sharecast. The FTSE 100 was down 0.6 per cent at 10,813.35 in morning trade.

Oil prices were lower too, with Brent crude off 2.6 per cent at 106.97 dollars a barrel and US West Texas Intermediate 1.9 per cent lower at 99.49 dollars after US President Donald Trump waived sanctions and tariffs on Russia, potentially allowing higher fuel exports, Sharecast reported. Danske Bank cautioned that supply risks remained elevated, as Ukraine struck Russian energy infrastructure over the weekend and attacks on vessels near the Strait of Hormuz continued to threaten Gulf crude flows.

Attention in the United States is turning to Wednesday’s earnings reports from Tesla, Meta Platforms and IBM, which investors will scrutinise for evidence that corporate spending on artificial intelligence is generating returns, the Wall Street Journal reported.

Analysis: Why It Matters

1. A beat that buys Beijing room — not applause

On the surface, a 0.1 percentage-point beat looks modest. But its real significance lies in what it removes rather than what it adds: with nine-month growth at 4.6 per cent, comfortably inside the annual target range, the case for emergency-scale stimulus in the fourth quarter has weakened considerably. That is exactly why the analyst reaction has been measured — the data validates the government’s go-slow approach of targeted measures rather than the “big bazooka” that markets have intermittently demanded. For investors, the message is clear: do not expect broad-based easing before year-end.

2. The export engine is both the hero and the vulnerability

Exports are keeping China’s economy afloat, as the UOB analysis put it — but an economy kept afloat by one engine is also hostage to it. A trade surplus racing towards a second consecutive record of well over a trillion dollars is precisely the kind of statistic that invites retaliation from trading partners already complaining about Chinese overcapacity. The EU’s move to restrain Chinese hybrid-vehicle shipments is an early warning shot: the bigger the surplus grows, the more the export model risks becoming a diplomatic liability. Beijing’s policymakers must now manage the paradox of needing exports more than ever while knowing that each record surplus makes the next one politically harder.

3. The two-speed economy is becoming the permanent story

The most revealing numbers in Monday’s release were not the headline GDP figure but the splits beneath it: industrial output at its strongest since March against a 20.6 per cent collapse in property investment and a 7.2 per cent fall in fixed asset investment. The state’s deliberate redirection of credit from property towards high-tech manufacturing has succeeded in creating a new industrial engine — but it has not yet built anything to replace the domestic-demand engine it is dismantling. Retail sales of 1.1 per cent, while beating forecasts, remains feeble for an economy of China’s size. Until households spend with confidence again, growth will remain an export-and-factory story — and exports, as the EU friction shows, are never guaranteed.

4. The property hole keeps getting deeper

Property investment falling 20.6 per cent — worse than the 19.9 per cent of the January-to-August period — shows that years of support measures have still not arrested the sector’s decline. The property downturn has been the defining feature of China’s post-pandemic slowdown, destroying household wealth expectations and dragging local-government finances down with land-sale revenue. The 550 billion yuan of unused debt quotas for local governments is a tacit admission that municipalities remain under strain. A recovery in property is no longer required for Beijing to hit its growth target — but its absence means the domestic economy will keep leaking.

5. The calendar now matters more than the data

With the growth target effectively in the bag, the question for the fourth quarter is less about the economy than about timing: October trade data could push the surplus past the trillion-dollar milestone, the annual policy cycle is winding down, and external pressures — from EU trade friction to the shifting US tariff landscape — will determine whether 2027 starts on solid ground. The data tells us where China stands; the politics will decide where it goes.

What to Watch Next

1. October trade data — whether the surplus crosses the 1 trillion dollar mark this year, and how trading partners respond to a second consecutive record.
2. Fourth-quarter policy signals — whether Beijing uses its newfound breathing room for targeted measures or holds fire entirely until 2027.
3. Property investment — any sign that the decline from 20.6 per cent is bottoming out, or whether the sector has further to fall.
4. EU-China trade friction — follow-through on the hybrid-vehicle shipments deal and whether auto exports become the next flashpoint.
5. Consumption — whether September’s retail-sales rebound to 1.1 per cent marks the start of a genuine recovery or just a blip before the year-end slowdown.

Sources

• Reuters — China’s economic growth picks up in third quarter, beating expectations
• Reuters — View: China’s economic growth accelerates to 4.5% in third quarter (analyst commentary)
• Seoul Economic Daily — China’s Third-Quarter GDP Grows 4.5%, Beating Forecasts
• Sharecast — FTSE, Brent crude, Chinese GDP market report
• Wall Street Journal — Meta, Tesla Earnings, Housing Data: What to Watch This Week