China's economy grew faster than expected in the third quarter of
2026, with strength in exports and factories masking weak consumer spending at
home. Soft domestic demand and a weak property market have weighed on China’s
economy over the last few years. Along with stimulus measures from China’s
government, the People's Bank of China (PBOC) has left its policy interest
rates at their lowest level ever to help support the economy and boost domestic
demand.


China's National Bureau of Statistics reported that gross domestic product (GDP) grew 4.5% year-over-year in the third quarter of 2026, up from 4.3% in the second quarter and above the 4.4% economists expected, according to a Bloomberg survey. Growth over the first nine months of 2026 was 4.6%, within Beijing's 4.5% to 5% target.
Exports and factories led the way over the third quarter. Industrial output increased over the quarter, while exports surged higher on strong global demand for technology products, particularly artificial intelligence.
Household spending and the property remain weak. Retail sales rose by just 1.1% year-over-year in September and real estate investment continued to decline. The statistics bureau itself said insufficient domestic demand remains prominent.
The PBOC stayed on hold at its October meeting. The one-year loan prime rate stayed at 3.00% and the five-year rate at 3.50%, the 17th straight month without a change at its lowest level ever. Solid economic growth reduces the urgency for broad interest rate cuts, and Beijing has leaned on targeted support instead, including a mortgage subsidy for first-time homebuyers.

China's economy is hitting its economic growth target, but it is
leaning heavily on exports and technology while consumers and the property
market struggle. That imbalance leaves growth exposed to any slowdown in global
demand and keeps pressure on Beijing to support households.

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