Oct 19 (Reuters) – China’s economic growth rebounded to 4.5% year-on-year in the third quarter, beating expectations and easing the pressure on policymakers for delivering more aggressive stimulus measures to meet the annual target.
The third-quarter gross domestic product growth rate, released by the National Bureau of Statistics (NBS) on Monday, beat the forecast for 4.4% growth in a Reuters poll, and improved from the more-than-three-year low of 4.3% in the April-to-June period.
KEY POINTS
* Q3 GDP +4.5% y/y (f’cast +4.4%, Q2 +4.3%)
* Q3 GDP +1.2% q/q (f’cast +1.1%, Q2 +0.9%)
* September industrial output +5.5% y/y (f’cast +5.5%, August +5.2%)
* September retail sales +1.1% y/y (forecast +0.6%, August +0.4%)
* January-September fixed asset investment -7.2% y/y (forecast -7.3%, January-August -7.2%)
* January-September property investment -20.6% y/y (January-August -19.9%) COMMENTARY
ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG:
“The economic momentum remained subdued in September. The retail sales growth rebounded slightly. After adjusting for inflation, real retail sales barely grew compared to a year ago. The GDP growth rate in Q3 rebounded to 4.5%. The GDP growth rate for the first three quarters combined grew by 4.6%, which is still above the lower end of the growth target zone. I wonder if this means that the government doesn’t need to make significant change to the policy stance in Q4 to achieve the growth target for the full year.”
RAYMOND YEUNG, CHIEF CHINA ECONOMIST, ANZ, HONG KONG:
“Overall, we maintain our 2026 GDP growth forecast at 4.6%, but risks remain tilted to the downside. Weak domestic demand, persistent deflationary pressure and an ongoing property downturn continue to constrain activity.
“While exports have provided an important buffer, they are unlikely to fully offset softness elsewhere in the economy. Growth has stabilised, but it has not yet entered a self-sustaining recovery.”
HO WOEI CHEN, ECONOMIST, UOB, SINGAPORE:
“External demand is still keeping the economy afloat, and I think that is also why the government is not really very aggressive in the stimulus.
“We see some targeted support here and there, but broad-based easing is not very likely at this point because I think growth is still on target at the bottom of the forecast range.
“Our forecast now is 4.5%.”
ANDY JI, ASIAN FX & RATES ANALYST, ITC MARKETS, SHANGHAI:
“China’s Q3 print beat on both the YoY and QoQ measures. The result puts China’s full-year 4.5%-5% growth target within reach, though still requiring a strong Q4. High-tech manufacturing, chip output, NEVs, and export delivery values reflect a competitive industrial upgrading that is real and accelerating.
“However, the growth composition remains deeply unbalanced… Growth is export- and state-led; domestic demand is not yet self-sustaining, and the property sector shows no floor.
“The GDP beat and retail sales surprise reduce the urgency for immediate broad-based easing. The PBOC has kept its policy rate steady since a cut in May 2025. While monetary policy is effectively on hold, the active policy debate is fiscal.”
BACKGROUND
* China’s economic growth has remained resilient this year, supported by booming AI-driven exports and robust manufacturing output, but underlying momentum remains uneven as households stay cautious, private firms rein in investment and the property sector struggles to stabilise.
* Exports, a key driver of growth, face mounting headwinds as a cooling AI investment cycle threatens demand for technology products and components.
* A deal with the European Union to curb Chinese hybrid-vehicle shipments could also weigh on one of the country’s fastest-growing export industries.
* The disconnect between robust industrial output and weak domestic demand has emerged as a key challenge for policymakers seeking to rebalance the economy.
* China is likely to rely more on fiscal stimulus to support growth, as firmer producer prices and a pickup in consumer inflation limit the scope for aggressive monetary easing.
* Growth is expected to slow to 4.5% in 2026 from 5.0% last year, before easing further to 4.4% in 2027, according to a Reuters poll.
(Reporting by Reuters Asia bureaus; Compiled and edited by Subhranshu Sahu)
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