China's economy grows 4.5% in the third quarter, beating forecasts as exports offset property slump

China's economy grew 4.5 percent in the third quarter from a year earlier, the National Bureau of Statistics reported on Monday, an acceleration from the three-year low of 4.3 percent recorded in the second quarter and a figure that beat the 4.4 percent expansion economists polled by Reuters had expected. The reading keeps Beijing on track to meet its full-year growth target, but the composition of the rebound, driven overwhelmingly by factories and exporters while households and property investors stay on the sidelines, underscores how lopsided the recovery remains.

Gross domestic product expanded 1.2 percent from the second quarter on a seasonally adjusted basis, the statistics bureau said. For the first nine months of the year, the economy grew a cumulative 4.6 percent, squarely inside the 4.5-to-5-percent range that Chinese authorities have set as their annual target. Output reached 107.1 trillion yuan, or roughly $15 trillion, over that period.

Exports do the heavy lifting

The strength in the data came almost entirely from trade. Combined imports and exports rose 18.8 percent year on year in the first three quarters, with exports up 16.4 percent and imports up 22.3 percent, according to the bureau's release. CNBC reported that China's monthly trade surplus hit a record $133.5 billion in September, as overseas demand for the country's machinery, electronics and other manufactured goods continued to outpace domestic consumption. Industrial output in September rose 5.5 percent from a year earlier, matching forecasts, while value added by equipment manufacturers climbed 10.2 percent and high-tech manufacturing grew 14.3 percent over the first nine months.

Retail sales, by contrast, limped along. Combined retail sales of goods and services rose just 2.6 percent in the first three quarters, with goods sales up only 1.0 percent. September retail sales grew 1.1 percent year on year — ahead of the 0.6 percent economists had forecast, but still among the weakest readings of the past year. Per-capita household disposable income rose a nominal 5.3 percent in the first nine months, the bureau said, with rural incomes once again outpacing urban ones.

A widening divide between factories and households

The clearest drag remains property. Investment in real estate development fell 20.6 percent year on year in the January-to-September period, a deeper decline than the 19.9 percent drop recorded through August, the statistics bureau's separate data on fixed-asset investment showed. The floor space of newly built homes sold dropped 13.2 percent, and sales revenue from new homes fell 13.9 percent. Overall fixed-asset investment contracted 7.2 percent for the first nine months; stripped of real estate, the decline was a more modest 4.2 percent, illustrating how much of the broader investment slump still traces back to housing.

Prices told a similarly mixed story. The consumer price index rose just 0.9 percent in the first three quarters, reflecting persistently weak demand, even as producer prices climbed at their fastest pace in more than four years, jumping 5 percent in September on higher coal and fuel costs. The urban surveyed unemployment rate held at 5.2 percent, unchanged from a year earlier.

• Q3 GDP: +4.5% year on year, +1.2% quarter on quarter
• First three quarters: +4.6% year on year; total output 107.1 trillion yuan
• Exports: +16.4%; imports: +22.3%; September trade surplus: a record $133.5 billion
• Real estate development investment: -20.6%; new-home sales floor space: -13.2%

Who feels the squeeze

The split recovery has distinct winners and losers. Exporters of machinery, electronics and vehicles, along with the ports, shipping lines and logistics firms that move their goods, have been the chief beneficiaries of the trade surge, even as the scale of China's shipments abroad has drawn complaints from trading partners in the United States, Europe and elsewhere about overcapacity being dumped on world markets. Property developers, construction firms and the local governments that depend on land sales for revenue remain under acute strain, a dynamic that also weighs on the millions of Chinese households whose wealth is concentrated in housing. Consumer-facing businesses, from retailers to restaurant chains, are contending with shoppers who are saving rather than spending, a pattern that has persisted for several quarters despite successive rounds of government support.

The data also carries weight well beyond China's borders. As the world's second-largest economy and a dominant supplier of manufactured goods, China's trade performance feeds directly into global shipping rates, commodity prices and the competitive position of manufacturers in other countries that compete with Chinese exporters.

What economists are saying

Economists who track the release said the headline beat masked a still-fragile underlying picture, even as most analysts expect policymakers to hold off on fresh large-scale stimulus for now and instead keep implementing measures already announced. Tianchen Xu, a senior economist at the Economist Intelligence Unit, said "the rebound in September salvaged the lukewarm performance in July and August," attributing it to stronger government investment, resilient exports and a weak base for comparison, and forecast full-year growth of 4.7 percent.

Sheana Yue, a senior economist at Oxford Economics, was more cautious about the property sector, saying "the prolonged housing slump will continue to limit the spillover from stronger industrial activity to the wider economy," and dismissed talk of the market bottoming out given weak home sales, construction starts and prices.

"It is clear that domestic imbalances between supply and demand continue rising," said Eswar Prasad, an economics professor at Cornell University, in a note issued after the data was released. "The government might become more sanguine and maintain a passive approach, rather than infusing stimulus into the economy in tandem with much-needed reforms."

What happens next

China's central bank, the People's Bank of China, is widely expected by economists to leave benchmark lending rates unchanged for the rest of the year, leaving fiscal policy to carry most of the burden of supporting growth. Beijing has already moved on that front: authorities cut mortgage rates and issued other targeted relief measures in late September, and the finance ministry this month tapped an additional 550 billion yuan of unused local-government debt quota to shore up county-level budgets and infrastructure spending. Economists including Oxford Economics' Yue expect the rollout of those already-announced measures to accelerate through year-end rather than be followed by a fresh stimulus package.

The fourth quarter will test whether the export boom that carried growth through the summer can be sustained as the comparison base from a year earlier gets tougher and as trading partners weigh further trade restrictions on Chinese goods. With the housing slump showing no clear sign of bottoming and consumer spending still subdued, the durability of China's growth beyond its factories and ports will remain the central question for policymakers, and for the global businesses that depend on Chinese demand, heading into 2027.