China’s economic growth accelerated to 4.5% in the third quarter, rebounding from a three-year low and reaching the lower bound of the government’s annual target range of 4.5%-5%. The pickup was primarily driven by a surge in exports, particularly in high-technology sectors and artificial intelligence-related goods, which have partially compensated for persistent weakness in domestic consumer spending and investment.
High-tech exports rose substantially, with sales of advanced goods climbing 14.3% year-over-year. Production of batteries and industrial robots each grew more than 29%, reflecting strong global demand for components used in AI data centers and related infrastructure. China’s trade surplus is on pace to exceed the previous record of $1.2 trillion set in the prior year, as exports continue to provide economic momentum at a time when internal demand remains subdued.
However, significant headwinds persist in the domestic economy. Property investment contracted by more than 20% compared to the same period in the previous year, continuing a prolonged slump that has hampered overall growth. Weak wage growth, elevated youth unemployment, and consumer pessimism have further dampened spending at home. Economists noted that Chinese households have become increasingly reluctant to consume, with uncertainties about geopolitical tensions and investment returns weighing on sentiment.
Analysts cautioned that China’s reliance on exports as its primary growth engine presents risks, particularly given global trade tensions and uncertainty surrounding the sustainability of artificial intelligence investment spending. In September, Beijing introduced a package of stimulus measures including targeted interest rate reductions and property purchase subsidies, though the effects of these initiatives remain to be observed. Concurrently, the country faces mounting trade friction with Western economies challenging what they characterize as artificially cheap Chinese exports.
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