China's Q3 Growth at 4.5% on Strong Exports, Weak Domestic Demand (Update)

September Retail Sales Rise Just 1.1%
Chinese Officials: "Domestic Demand Remains Insufficient"

China's gross domestic product (GDP) grew 4.5% in the third quarter of this year from a year earlier, up 0.2 percentage points from the previous quarter. Exports of advanced technology products related to artificial intelligence (AI) continued to rise, but domestic demand remained weak, with real estate investment plunging by more than 20%.

A view of Beijing, China, on the 18th. Xinhua News Agency-Yonhap News Agency

According to the Hong Kong daily South China Morning Post (SCMP), Xinhua News Agency and other outlets on October 19, China's National Bureau of Statistics announced that GDP grew 4.5% year on year in the third quarter. That was 0.2 percentage points higher than the 4.3% growth recorded in the second quarter and exceeded the market forecast of 4.41%, compiled by Chinese financial information provider Wind.

China's cumulative economic growth rate for January through September this year was 4.6%, within the 4.5% to 5.0% range of the growth target set by the Chinese government for the year. China lowered this year's target from its "around 5%" goal, which it had maintained for several years.

Exports and manufacturing supported growth. China's exports in September surged 36.3% from a year earlier, far exceeding market expectations. Strong global demand for AI and advanced technology products is seen as having driven the export boom. Industrial production also increased 5.5% that month, up from 5.2% in August.

In contrast, the recovery in domestic demand remained sluggish. Retail sales, an indicator of consumer activity, rose just 1.1% year on year in September. Although this was higher than the market forecast of 0.7% and August's 0.4% growth, the recovery in consumption remained limited.

Investment also remained weak. Fixed-asset investment fell 7.2% year on year in January through September this year. Real estate investment in particular plunged 20.6%, a steeper decline than the 19.9% cumulative drop recorded in January through August. The prolonged downturn in the real estate market continues to weigh heavily on the Chinese economy.

The labor market showed a slight improvement. The surveyed urban unemployment rate fell to 5.2% in September, down 0.1 percentage points from the previous month.

The Chinese government also acknowledged concerns over weak domestic demand. At a press conference in Beijing on October 19, Mao Shengyong, deputy commissioner of the National Bureau of Statistics, said, "In the first three quarters of this year, the Chinese economy pursued innovation-driven development and high-quality growth despite mounting pressure." He added, "The international environment is highly volatile, and domestic demand remains insufficient."

To support an economic recovery, the Chinese government is accelerating bond issuance and has announced plans for large-scale infrastructure construction and subsidies for mortgage interest payments. However, fiscal policy and international energy prices are cited as factors weighing on economic growth. In a recent report, Goldman Sachs said that weather conditions in the third quarter were more favorable to economic activity than in the second quarter, but that fiscal tightening and rising international energy prices were constraining growth.

This content was produced with the assistance of AI translation services.