Standard Chartered to acquire Zodia Custody

Standard Chartered economist Hunter Chan reports that China's Q3 GDP growth of 1.2% quarter-over-quarter and 4.5% year-over-year is a positive sign for the country's economic outlook in 2026. The growth was boosted by strong exports and demand in the AI-related industrial sector. However, household consumption remained weak. The bank retains its GDP growth forecasts of 4.7% for Q4 and full-year 2026, and 4.6% for the full year.

They also reduce their CPI forecast for 2026 to 0.9%, but expect higher PPI inflation. The Q3 GDP growth grew stronger than expected, with seasonally adjusted growth reaching 1.2% quarter-over-quarter, up from 0.9% in Q2. Industrial production growth was supported by robust exports and AI-related demand. Fixed-asset investment ended six months of declines due to increased manufacturing and infrastructure spending.

Household demand, however, stayed soft, as consumption spending growth trailed disposable income growth. The bank believes that measures such as the first-home interest subsidy program and the allocation of unused local government debt quotas will help dampen potential growth risks. Nonetheless, they highlight the importance of faster fiscal disbursement for infrastructure projects and the resolution of hidden local government debts and arrears to sustain growth.

CPI inflation is expected to stay lower than anticipated due to subdued energy price transmission and persistent food price deflation. However, global oil and metal price pressures, along with higher costs for AI-related inputs and products, could push PPI inflation above 3% this year.