China’s quarterly growth rebounds to 4.5% on AI export strength

China’s economic expansion accelerated in the third quarter, rising to 4.5 per cent as a surge in artificial intelligence related exports helped offset domestic weakness. This performance marks a recovery from a three-year low recorded in the previous period, although it remains below the 5 per cent growth achieved in the first quarter of the year. Official data indicates that the latest figure sits at the lower boundary of Beijing’s annual growth target of 4.5 to 5 per cent, a range that analysts suggest provides policymakers with sufficient flexibility to address ongoing economic challenges.

The National Bureau of Statistics stated on Monday that the economy maintained steady development despite external pressures, demonstrating momentum through new growth drivers and structural improvements. Export volumes increased significantly, positioning China’s trade surplus to potentially exceed the record 1.2 trillion dollars, or 900 billion pounds, set in the previous year. High-tech goods sales rose by 14.3 per cent, while the production of batteries and industrial robots both expanded by more than 29 per cent. These gains in manufacturing and technology sectors have been identified as primary contributors to the recent growth, compensating for weaker investment and domestic spending.

Despite the export-led recovery, significant structural headwinds persist. Property investment declined by more than 20 per cent in the first nine months of the year compared to the same period last year, reflecting the continued impact of a long-running sector slump driven by overbuilding and excessive borrowing by private developers. Economists note that there are no immediate signs of a reversal in this trend. Furthermore, trade uncertainties and geopolitical tensions have contributed to a more pessimistic consumer sentiment, with households showing reluctance to spend. Weak wage growth and high youth unemployment have further weighed on domestic consumption, forcing businesses to rely heavily on overseas markets.

In response to these challenges, Beijing introduced a series of support measures in September, including reduced interest rates for specific businesses and subsidies for property buyers. However, the full impact of these policies has yet to be realised. Economists warn that the economy remains vulnerable due to its reliance on a single external engine in the form of exports. Additionally, Beijing faces increasing backlash from Western economies, including the United States and the European Union, as domestic manufacturers struggle to compete with large volumes of inexpensive Chinese goods. Concerns also remain regarding the sustainability of the billions of dollars invested in AI infrastructure and whether the companies involved can deliver the promised returns on such substantial capital expenditure.