China’s economy grows 4.5% in the third quarter, exceeding forecasts

Yesterday 13:05

By: Azzat Manal

China’s economy grows 4.5% in the third quarter, exceeding forecasts

China’s economy expanded by 4.5% year on year in the third quarter of 2026, exceeding market expectations of 4.4% and accelerating from the 4.3% growth recorded in the second quarter, according to official data released on Monday. The figures suggest that economic activity gained some momentum despite persistent challenges affecting investment and the property sector.

Data published by China’s National Bureau of Statistics showed that industrial production rose by 5.5% in September compared with the same month a year earlier, up from 5.2% in August. This represented the strongest expansion in six months, indicating improved performance in the country’s manufacturing and industrial sectors.

Consumer activity also showed signs of improvement. Retail sales, a key indicator of household spending, increased by 1.1% year on year in September, compared with 0.4% in August. The result exceeded analysts’ expectations of 0.6% and marked the fastest growth since March, although the pace of consumption remains an important factor to monitor as China seeks to strengthen domestic demand.

Investment remains a major concern

Despite stronger industrial output and retail sales, investment continued to weigh on the economic outlook. Fixed-asset investment fell by 7.2% during the first nine months of 2026, maintaining the same rate of decline recorded between January and August. Property investment dropped by 20.6%, highlighting the continued difficulties facing China’s real estate industry.

Infrastructure investment also contracted, declining by 4.2% despite government support measures. Beijing has sought to encourage spending and sustain growth, including by allocating 550 billion yuan, equivalent to approximately $82.28 billion, from unused government debt quotas to support local authorities and expand infrastructure investment. The effectiveness of these measures will depend partly on how quickly funding translates into new projects and economic activity.

Growth remains within the government’s target range

China’s economy grew by 4.6% between January and September, keeping growth within the government’s full-year target range of 4.5% to 5%. On a quarterly basis, gross domestic product increased by 1.2% in the third quarter, exceeding expectations of 1.1% and accelerating from 0.9% in the previous quarter.

External trade provided another source of support. China’s trade surplus widened more than expected in September as exports surged, keeping the country on course to potentially exceed the record surplus of $1.2 trillion reported last year. However, the strength of exports also comes amid concerns about rising trade tensions with major trading partners.

The latest figures present a mixed picture of the world’s second-largest economy. Stronger industrial production, improving retail sales and resilient exports have supported growth, while falling investment and continued weakness in the property market remain significant challenges. Policymakers will need to balance targeted stimulus with efforts to strengthen household consumption and investment if China is to maintain growth within its annual target range.