China’s economy showed signs of acceleration in the third quarter of 2026, driven primarily by a surge in exports supported by growth in artificial intelligence-related sectors. The country’s gross domestic product (GDP) expanded 4.5 percent year-on-year between July and September, surpassing market forecasts and edging up from 4.3 percent growth in the previous quarter, according to the National Bureau of Statistics (NBS). For the first nine months of the year, GDP growth stood at 4.6 percent, positioning China on track to meet its official full-year growth target of 4.5 to 5 percent.
Industrial output proved particularly robust, with production rising 5.5 percent in September compared to the same month the previous year, exceeding the 5.2 percent gain recorded in August. This increase was partly attributed to the resumption of coal mining activities following safety inspections triggered by a prior accident. Manufacturing output as a whole grew 6.0 percent year-on-year in September, supported by strong export demand for electronics, AI-related equipment, and automobiles.
Retail sales, while improving, remained comparatively subdued, rising 1.1 percent in September, up from 0.4 percent in August. Fixed asset investment continued to decline, falling 7.2 percent during the first nine months of the year, reflecting ongoing challenges in the property sector. New home prices in 70 major cities fell 0.14 percent in September compared to August, a slight easing from the 0.17 percent drop observed the previous month.
China’s economic leadership continues to confront a dual-speed recovery characterized by robust export growth fueled by high-tech industries and artificial intelligence, contrasted with weak domestic demand that reflects continued struggles in the property market and consumer spending. Mao Shengyong, deputy director of the NBS, noted that despite the growth rate being among the lowest in decades outside the pandemic period, it remains one of the strongest among major global economies amid a complex international environment.
The country’s expanding trade surplus, poised to surpass last year’s record $1.2 trillion, has raised concerns among international trading partners. This dynamic led to recent negotiations between Beijing and the European Union that resulted in an agreement to impose a quota on Chinese hybrid car imports to the bloc, averting a broader trade conflict. The EU is expected to implement further protective measures to shield its manufacturing base from competition with lower-cost Chinese products.
Overall, economists suggest that while China’s growth momentum has benefited from the export sector’s strength, domestic demand remains a critical area requiring policy attention to sustain a more balanced and stable economic trajectory.