China’s economy grows 4.5 percent in Q3, beating forecasts

On October 19, China's economy expanded 4.5% in the third quarter, slightly better than expected but still below the government's annual target for growth. The National Bureau of Statistics (NBS) reported the quarter's GDP growth at 4.5%, an improvement from the previous 4.3% expansion and matching forecasts from an AFP poll of economists. However, the figures represent a lower end for the year's target of 4.5 to 5.0%.

The external shock of a global energy crisis and domestic demand concerns played a role in the weaker-than-expected outlook. Despite surging exports, which were driven by strong foreign demand for AI-related products, the economy faces headwinds from high energy prices and an ongoing real estate crisis. The IMF recently reduced its growth projection for China to 4.5% for the year.

Domestic demand remained insufficient, with retail sales growth slowing to just 1.1% in September, the fastest pace since March. However, fixed-asset investment declined 7.2% over the first nine months of the year, indicating a lack of momentum in this crucial sector. Industrial production grew 5.5% year-on-year in September, bolstered by foreign demand, but real retail sales barely grew when adjusted for inflation.

The situation has prompted Beijing to offer mortgage subsidies and infrastructure support to stimulate the economy. However, economists suggest that the better-than-expected GDP figures may prevent significant policy shifts in the fourth quarter to meet the annual growth targets. China, the world's largest importer of crude oil, grapples with rising energy costs from the Iran war, further complicating its economic outlook.