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
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)
