China's Growth Accelerates to 4.5% as Investment Contraction Deepens and Property Pressures Persist
Key Facts
China's economic growth accelerated to 4.5% year-on-year in the third quarter of 2026, according to National Bureau of Statistics data released on October 19, as investment continued to contract. Growth picked up from 4.3% in the second quarter, while gross domestic product expanded 4.6% in January–September compared with the same period last year. On investment, the bureau reported that fixed-asset spending, excluding rural households, fell 7.2% year-on-year in January–September. The decline was steeper in non-government investment, which fell 10.4% over the same period, exceeding the contraction in total fixed-asset investment. Pressures extended to property development, with an Investing.com report citing a 20.6% decline in investment in the sector in the first nine months of the year. The property contraction was thus larger than the declines in both non-government investment and total fixed-asset investment over the same period.
Against this investment backdrop, foreign direct investment actually used in China totalled 479.95 billion yuan in January–August, according to Xinhua, as carried on the Chinese government's official website. Those inflows fell 5.3% from the same period a year earlier, adding to signs of weak investment in China's economy. DBS Bank described the economic recovery as uneven, with export-related activities performing differently from components of domestic demand. The bank said in its research that the AI electronics cycle was supporting exports and manufacturing, providing a boost to both activities. By contrast, it pointed to continued weakness in consumption, investment and credit demand, despite the support manufacturing and exports were receiving. The bank summed up this divergence by saying that "the AI electronics cycle continues to support exports and manufacturing," while the components of domestic demand it identified remained weak.
On monetary policy, China kept its benchmark lending rates unchanged in its October decision, according to a report published by Investing.com on Tuesday. The one-year loan prime rate remained at 3.00%, as DBS Bank described credit demand as weak. The loan prime rate for maturities of more than five years also remained at 3.50%, alongside the continued decline in property investment. In equities, the CSI 300 index fell 0.2% in early trading on Monday, October 19, following the release of China's economic data, according to the Investing.com report. That intraday decline followed the announcement that third-quarter GDP growth had accelerated from the second quarter.
Alongside the volatility, Reuters cited a financial adviser as saying wealthy investors were considering selling domestic A-shares in mainland China to raise cash. Assessing the implications of tax collection on offshore trust arrangements, Winnie Wu, China equity strategist at BofA Securities, said risks could be concentrated in individual stocks. But she added that the collection was "unlikely to be the dominant driver of the Hong Kong market," according to Reuters. Attention is turning to October 22, the deadline for submitting self-assessments of tax due on income from offshore trust arrangements, according to Oscar Liu of JLT Legacy Group, who spoke to Reuters. Liu said those concerned must "submit their own calculations of the tax due by the October 22 deadline, and pay after the authorities confirm the amount." Payment therefore follows the authorities' confirmation of the amount due, while the October deadline concerns submission of the self-assessment.