China's GDP grew 4.5% in the July-September quarter, supported by strong export performance even as domestic demand remains weak.
Key facts
- •China's GDP growth of 4.5% in the third quarter beat the 4.3% recorded in the previous quarter.
- •The IMF has forecasted China's annual growth for 2026 at 4.5%.
- •China recorded a $938 billion trade surplus for the first nine months of 2026.
- •Exports of passenger cars increased by more than 70% in the first nine months of 2026 compared to the same period last year.
- •The European Union runs a daily trade deficit with China of more than $1.1 billion.
China reported a 4.5% economic expansion for the July-September quarter compared to the previous year, surpassing the 4.3% growth recorded in the April-June period. This performance aligns with the government's annual growth target of 4.5% to 5% for 2026. While exports remain a primary driver of this growth, the country continues to face challenges from persistent domestic weakness and international trade tensions.
By the numbers
Export Performance and Trade Tensions
Exports have emerged as a significant economic pillar, with China on track to exceed its record $1.2 trillion trade surplus from last year. High-tech sectors, particularly semiconductors and electric vehicles, are leading this growth. In September alone, China shipped approximately 919,000 passenger vehicles overseas, contributing to a total of over 7.1 million passenger cars exported in the first nine months of 2026, a 70% increase year-over-year. This export surge has intensified friction with trading partners, including the European Union, which currently runs a daily deficit with China exceeding $1.1 billion. In response to concerns over domestic industry threats, the EU recently reached an agreement to cap Chinese hybrid vehicle imports at 350,000 units annually.
Domestic Economic Challenges
Despite the headline growth figures, analysts suggest the data may mask underlying domestic imbalances. A prolonged property slump has negatively impacted household wealth and increased savings, leading to softened domestic demand. Experts, including Max Zenglein of The Conference Board, note that the current export-reliant model has resulted in limited job creation and income growth, while Ecaterina Bigos of BNP Paribas Asset Management highlighted the rising risk of AI-driven job losses. Chinese central bank governor Pan Gongsheng stated that the country is committed to expanding domestic demand and emphasized the need for cooperation between surplus and deficit nations. Beijing has rejected claims that an undervalued yuan is the primary driver of its trade surplus.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Euronews Business.
