China’s economy expanded faster than expected in the third quarter, with GDP rising 4.5% year on year and 1.2% from the previous quarter. The figures exceeded market forecasts of 4.4% and 1.1%, respectively. Improved industrial output and retail sales in September supported the quarterly result, while resilient manufacturing and exports continued to offset weakness in property and broader investment. The recovery, however, has yet to spread across domestic demand and investment activity.
GDP growth accelerates as September activity improves
Third-quarter GDP growth increased from 4.3% in the second quarter to 4.5%. In the first nine months of the year, the economy grew 4.6% year on year, remaining within the government’s full-year growth target range of 4.5% to 5.0%.
Industrial output at companies above the designated size threshold rose 5.5% year on year in September, up from 5.2% in August and ahead of the 5.4% market expectation. Retail sales growth also improved, accelerating to 1.1% from 0.4% and exceeding the 0.5% forecast.
The consumption data remained uneven. Over the first nine months, services retail sales increased 5.0%, while goods retail sales rose just 1.0%. The surveyed urban unemployment rate stood at 5.2% in September.
High-tech manufacturing and exports support output
The strongest gains remained concentrated in higher-value manufacturing. High-tech manufacturing output rose 14.3% in the first nine months, while equipment manufacturing increased 10.2%. Both sectors substantially outpaced the 5.3% increase in overall industrial output during the same period.
Production of 3D-printing equipment climbed 62.5%, lithium-ion battery output rose 39.5%, and industrial robot production increased 29.1%. Investment in high-tech industries grew 4.9%, contrasting with the contraction in overall fixed-asset investment.
External demand also supported manufacturing activity. Measured in yuan, goods exports rose 29.6% year on year in September. Export growth and technology-related industries strengthened the headline economic performance, but their relative resilience also underscored the weakness in domestic investment.
Property investment drops 20.6% as broader investment contracts
Fixed-asset investment fell 7.2% in the first nine months, matching the decline recorded through the first eight months. Property development investment dropped 20.6%, infrastructure investment declined 4.2%, and manufacturing investment decreased 2.1%.
The weakness extended beyond the property sector. Excluding property development, fixed-asset investment still fell 4.2%, indicating that the investment slowdown is not limited to residential construction.
The property market also remained under pressure. New commercial housing sales by value declined 13.9% during the period, while floor space sold fell 13.2%. Continued weakness in real estate is weighing on investment, and the rebound in industrial output has not yet translated into broader investment growth.
Growth target remains within range, but domestic demand lags
The 4.6% growth recorded for the first nine months remains inside the full-year target range. The stronger third-quarter figures may reduce near-term pressure for large-scale stimulus, but they do not remove the economy’s internal divergence. China’s National Bureau of Statistics identified insufficient domestic demand as a prominent current challenge.
At present, faster growth is concentrated in high-tech manufacturing, equipment manufacturing and exports, while property development and overall fixed-asset investment continue to contract. The key question is whether industrial production and external demand can generate a wider recovery in domestic consumption and investment. The latest data do not yet show that such an improvement has become broad-based.