China’s economy grew at its slowest pace in a year in the latest quarter amid a trade war with the US and long-running woes in its property market.
Fragile domestic demand has left China’s economy heavily reliant on manufacturing and trade, at a time of mounting tensions with the Donald Trump administration.
GDP rose by 4.8% year on year between July and September, down from the second-quarter growth rate of 5.2%. It expanded by 1.1% in the third quarter compared with the second, the same as the revised growth rate for that quarter.
“September activity data showed continued weakness in domestic demand, partly due to poor business and household confidence,” noted Kelvin Lam, the senior China+ economist at Pantheon Macroeconomics.
Investment growth slowed, with property investment diving 13.9% year on year in September, after falling 12.9% in August.
Consumer demand was still muted, with real growth in retail sales slowing sharply to 3.5%, from 4.1% previously.
Industrial production was a bright spot, rising by 6.5% in September, better than expected.
Despite the simmering trade war with Washington, trade also beat analysts’ forecasts, accounting for just over a quarter of the headline growth, broadly unchanged from the second quarter – the onset of the Trump “reciprocal” tariff saga.
China’s exports to the US fell by 27% year on year last month but shipments to the EU, south-east Asia and Africa grew by 14%, 15.6% and 56.4% respectively as the country diversified away from the American market.
Beijing could use this to its advantage in talks between its vice-premier He Lifeng and the US treasury secretary, Scott Bessent, in Malaysia this week, and a potential meeting between the countries’ presidents, Trump and Xi Jinping, in South Korea at a later date.
Chinese “export orders have risen quite strongly, which bodes well for future production growth,” Lam said. “The export sector has been performing better than we previously expected despite higher import tariffs.”
The headline economic growth figure matched analysts’ expectations, and kept the economy on track for China’s 5% growth target this year. However, questions remain over whether there will be further stimulus measures from Beijing and local authorities.
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“With China on track to hit this year’s growth target, we could see less policy urgency,” said Lynn Song, the chief economist for Greater China at ING.
“But weak confidence translating to soft consumption, investment, and a worsening property price downturn still need to be addressed.”
A debt crisis has dented the once-booming property sector. The market weakened again, with further policy measures needed, analysts said. New home prices extended their declines in September, while the volume of residential property transactions fell by 12.5%.
China’s four-day “fourth plenum” meeting – where Communist party leaders gathered to hammer out the country’s next five-year plan – began on Monday.
The official Xinhua news agency said that, in a speech at the meeting, Xi “expounded on the party leadership’s draft proposals” for the plan, which will cover 2026-2030. It did not provide any details of the plan.
