Overview of Beijing’s central business district (CBD) on September 1, 2026.
Wang Zhao | AFP | Getty Images
China’s economic growth accelerated to 4.5% in the third quarter from a year earlier, with strong overseas demand for the country’s technology products largely offsetting drag from a deepening real estate recession and weak consumer demand.
Growth in the third quarter was higher than the 4.4% expansion expected by economists polled by Reuters, and also faster than the 4.3% expansion in the second quarter, which was the lowest in three years.
“September’s recovery rescued the weak performance in July and August,” said Tiancheng Xu, senior economist at the Economist Intelligence Unit, noting that improved government investment helped prevent a consistent deterioration in fixed asset investment, and that the “consistently strong” external sector and weak fundamentals contributed to the recovery. China’s monthly trade surplus reached a record high of $133.5 billion.
Xu said the momentum of the three forces is likely to continue into the fourth quarter, and he expects full-year growth to be 4.7%.
The data shows the economy remains reliant on factories and foreign buyers, while households and individual investors are holding back, with growth averaging 4.6% in the first nine months, roughly in line with Beijing’s official target range of 4.5-5%.
Retail sales rose 1.1% in September, beating analysts’ expectations for a 0.6% rise, while industrial production also rose 5.5% from a year earlier, in line with expectations for a 5.5% increase. The urban unemployment rate in September was 5.2%.
Fixed asset investment in urban areas fell by 7.2% in the first nine months of this year compared to the same period last year, compared to a Reuters poll estimate of a 7.3% decline. Investment in real estate development has fallen sharply, falling by 20.6% in the first eight months, compared to 19.9% in the first eight months.
Sheena Yue, senior economist at Oxford Economics, said Chinese households are seeing less wealth stored in real estate over the years, and that “the prolonged housing recession will continue to limit the transmission of strong industrial activity to the broader economy.”
Yue also dismissed the idea that there are new buds in the real estate market, as there are few signs that the sector’s slump has “bottomed out” in terms of home sales, construction starts and prices.
lopsided growth
Beijing is relying heavily on exports for growth this year, but that engine is under increasing pressure as soaring energy costs and a surge in manufacturing and exports have increased unrest among trading partners. Meanwhile, other parts of the economy remain weak, weighed down by weak consumption and a multi-year real estate recession.
“It is clear that the domestic demand-supply imbalance continues to widen,” Eswar Prasad, an economics professor at Cornell University, said in an email after Monday’s data release. He added: “Rather than injecting stimulus into the economy alongside much-needed reforms, the government may become more optimistic and maintain a passive approach.”
Producer prices rose at the fastest pace in more than four years, rising 5% in September, but consumer inflation remains below 1%, reflecting persistent overcapacity and weak demand that are constraining business pricing power. “This could result in companies absorbing more of the cost shock through lower margins than through higher selling prices,” Yue said.
Economists largely expect the People’s Bank of China to keep its benchmark lending rate unchanged for the rest of the year and to largely respond with fiscal measures.
While the healthy pace of growth may reduce immediate pressure on the Chinese government to step up stimulus, Yue expects the implementation of already announced measures to accelerate, supporting investment and activity in the coming quarters.
Chinese authorities have stepped up fiscal support in recent weeks, including targeted interest rate cuts and a mortgage subsidy at the end of September. Earlier this month, it also allocated 550 billion yuan of unused debt facilities to ease the fiscal burden on local governments and boost infrastructure spending.
Correction: This article has been corrected to reflect that quarterly GDP growth was 4.5%.
