China’s Growth Accelerates to 4.5% in Third Quarter Despite Investment Slump and Weak Retail Sales
Key Facts
China’s gross domestic product grew 4.5% year on year in the third quarter of 2026, after expanding 4.3% in the second quarter, and rose 1.2% from the previous quarter, according to the National Bureau of Statistics. The annual reading was above economists’ average forecast of 4.4%, according to a Reuters poll. Growth reached 4.6% in the first nine months, with output totaling 107,107.1 billion yuan at constant prices. The Associated Press said China’s leadership is targeting growth of between 4.5% and 5% in 2026, after an expansion of 5% in the previous year. But the acceleration in output did not allay concerns about the components of demand, as it coincided with falling investment and limited retail growth.
Mao Shengyong, deputy head of the National Bureau of Statistics, warned that “the problem of insufficient domestic demand remains relatively prominent,” adding that the foundation for stabilizing and improving the economy “still needs to be consolidated,” according to the Associated Press. Retail sales reflected this weakness: sales of consumer goods rose 1.1% year on year in September, the same rate recorded from January to September. But September growth accelerated by 0.7 percentage points from the previous month. Services retail sales rose 5.0% in the first nine months. Online retail sales of goods and services increased 4.4%, while online sales of goods rose 3.8%; the bureau expanded the coverage of the first indicator, making a direct comparison with the previous indicator impossible.
Factories, by contrast, performed better than stores: industrial value added rose 5.5% year on year in September, up 0.3 percentage points from the previous month, and grew 5.3% in the first nine months, according to the National Bureau of Statistics. This coincided with an improvement in the official manufacturing purchasing managers’ index to 50.1 in September, up 0.3 points from the previous month. In trade, the value of exports rose 29.6% and imports 24.6% year on year in September, according to bureau data. The Associated Press put export growth at 36%, citing a trade surplus of $938 billion between January and September. The data place trade and industry on the stronger side of economic activity, while domestic consumer spending remained slower.
Investment remained the weakest component of the data: fixed-asset investment fell 7.2% year on year in the first nine months, while private investment dropped 10.4%, according to the National Bureau of Statistics. Investment in real estate development fell 20.6%, while infrastructure investment declined 4.2%. The property-sector pressure extended to sales of new commercial housing, whose floor area fell 13.2% and value declined 13.9% over the same period. Funds received by real estate developers also fell 21.6%, and domestic loans to them dropped 33.1%. The figures underscore continued contraction in property financing and sales alongside declines in private and infrastructure investment.
The decline was not broad-based across all investment areas: investment in high-tech industries rose 4.9% in the first nine months, while investment in information services increased 20.2%, according to the National Bureau of Statistics. The contrast between expansion in technology fields and declines in property and private investment highlights the economy’s mixed performance over the period. On an annual comparison, third-quarter GDP growth was slower than a year earlier, when it was 4.8% in the third quarter of 2025. For the current year, a Reuters poll forecast growth of 4.5%, the lower end of the official target range. The International Monetary Fund forecast growth of 4.5% in 2026 and then 4.0% in 2027.