China's Q3 GDP grows 4.5% as exports surge and retail sales beat forecasts

Growth edges past forecasts in the third quarter

China's gross domestic product rose 4.5% year on year in the third quarter of 2026, according to the National Bureau of Statistics, slightly above expectations and up from 4.3% in the second quarter. The figure was released on Monday, 19 October. The first quarter had recorded 5%, so growth has slowed over the year, yet the reading sits in the lower part of the government's target range of 4.5% to 5%. On a quarterly basis the economy grew 1.2%, after 0.9% in the second quarter. Preliminary estimates for the first nine months put growth at 4.6%, with primary industry up 3.7%, industry up 3.8% and services up 5.2%.

Retail and industry

Retail sales rose 1.1% year on year in September, accelerating from 0.4% in August and beating forecasts. Sales of consumer goods grew 1.1% across the first nine months of the year. Catering revenues increased 2.1% in September and 2.4% from January to September. Industrial output rose 5.5% in September, in line with expectations and slightly ahead of the 5.2% recorded in August. The government also said investment in property fell 20.6% in the first nine months, while total investment dropped 7.2% over the same period.

Exports drive the expansion

Exports rose 36.3% in September after 25% in August, so foreign demand is carrying the economy while domestic spending lags. Exports from makers of memory chips rose 136% in dollar terms against September 2025, while exports of phones rose 14%. The monthly trade surplus reached $133.5 billion. The export surge is tied to global investment in AI data centres, which need Chinese chips. Companies across many sectors are building large data centres, and that spending is feeding demand for Chinese components.

Weak demand at home

Domestic demand remains weak. Closures of small shops and restaurants are increasing in central Beijing, and many vacant units are covered with banners reading 'Coming soon'. The property crisis continues to weigh on consumer confidence, and the 20.6% fall in property investment in the first nine months underlines the scale of the slump. Spending by households remains cautious even as retail sales edged up in September.

Markets and the outlook

Mainland Chinese shares recovered earlier losses, with the Shanghai Composite up 0.7% and the Shenzhen index up 0.4%. Hong Kong markets were closed for a holiday. Japan's Nikkei fell 0.5%, while Seoul gained 1.5%. US index futures rebounded after the pullback on Wall Street on Friday. European markets were expected to open weak, with the euro briefly dipping below 1.12 against the dollar. Concerns about AI financing and profitability continued to weigh on technology stocks ahead of a busy week of corporate earnings. On the reported figures, the economy is likely to meet the government's 4.5% to 5% growth target for the year, even as domestic demand lags behind exports.