China's economy grows 4.5% in Q3, powered by AI-driven export surge

China's economy grew faster than expected in the third quarter of 2026, as a boom in artificial-intelligence-related exports pushed GDP up 4.5 percent year-on-year — an acceleration from 4.3 percent in the second quarter and ahead of most analysts' forecasts, according to data released Monday by the National Bureau of Statistics.

China's GDP grew 4.6 percent over the first nine months of the year, putting the country on course to hit its official full-year growth target of 4.5 to 5 percent. Total output in the January-September period reached approximately 107.11 trillion yuan (about $15.94 trillion), according to the NBS. Speaking to reporters, NBS deputy head Mao Shengyong said the economy generated an additional 5.7 trillion yuan in output over that nine-month span — the biggest such gain for that period in five years.

The national economy forged ahead against pressure and continued to shift toward innovation-driven, high-quality development, with growing positive changes in major indicators.— National Bureau of Statistics

The headline driver was exports. Goods imports and exports combined rose 18.8 percent year-on-year in the first three quarters to reach 39.94 trillion yuan, with imports up 22.3 percent, according to the NBS. Trade for September alone was up 27.5 percent. Separate customs data showed September exports surging 36.3 percent year-on-year in dollar terms — accelerating sharply from 25 percent in August — with the monthly trade surplus widening to $133.5 billion.

The export engine is running on AI demand. Customs data indicated that electronic component exports climbed 70 percent in the first three quarters. Overall Chinese exports rose more than 16 percent over the same period, driven largely by strong demand for semiconductors and other technology goods. The NBS reported that high-tech manufacturing output was up 14.3 percent year-on-year through the first nine months, with production of industrial robots, lithium-ion batteries, and 3D printing equipment rising 29.1 percent, 39.5 percent, and 62.5 percent respectively.

New growth drivers — a category covering innovation-led industries — contributed more than 40 percent to overall economic growth in the first three quarters, the NBS said. Equipment manufacturing grew 10.2 percent year-on-year, and the services sector expanded 5.2 percent, led by information transmission, software, and IT services, which rose 10.4 percent.

The picture at home is considerably more subdued. Consumer goods retail sales inched up just 1.1 percent year-on-year in September and 2.6 percent across the first nine months — well below the pace of industrial output. Over the January-September period, fixed-asset investment — which encompasses spending on real estate, factories, and machinery — shrank 7.2 percent, even as high-tech industry investment expanded 4.9 percent and spending on intellectual property products climbed 9.3 percent.

Driven by fuel and energy costs as oil trades above $100 a barrel amid conflict in West Asia, producer prices climbed 5.0 percent year-on-year in September — their steepest rise since June 2022. Consumer prices, held down by falling food and pork prices, rose only 0.9 percent, a gap that reflects factories paying more for inputs while households remain cautious spenders.

I expect Beijing is getting 4.5 percent as wanted. A managed slow slowdown is the best Beijing can hope for. Real estate is still shrinking. This is what Beijing wanted and a good thing, and China's households have been adapting their expectations based on this.— Zhiguo He, finance professor, Stanford University Graduate School of Business

The export surge is generating friction beyond China's borders. Trading partners, including the European Union, are urging Beijing to rebalance trade, and investors in Seoul and Tokyo are keeping a close eye on Chinese chipmakers such as ChangXin Memory Technologies as they narrow the gap with South Korean and Japanese rivals — positioning China as both a growing customer and a sharper competitor for its Asian neighbours.

Across the first three quarters, the surveyed urban unemployment rate held steady at 5.2 percent, matching the level recorded a year earlier. In the first nine months, per capita disposable income grew 5.3 percent in nominal terms and 4.4 percent in real terms year-on-year. The NBS said China will step up efforts to expand domestic demand and improve the effectiveness of macro policies to sustain the current momentum.

China's 4.5-to-5-percent growth target for 2026 would, if met, represent one of the slowest expansions in decades outside the COVID-19 pandemic years. The government has been deliberately managing a contraction in the property sector, which for years was a primary engine of growth and household wealth.

Why it matters — China's export-led acceleration keeps the world's second-largest economy on target for 2026, but the widening gap between booming tech exports and stagnant domestic consumption is intensifying trade tensions with the EU and stoking competitive anxiety across Asia.

Reported by reuters.com, english.scio.gov.cn, news.cgtn.com, pressofasia.com, aljazeera.com