China’s growth rebounds to 4.5% as exports outpace domestic demand

Beijing, China. China’s economy recovered from its weakest growth in three years to expand by 4.5% in the third quarter, exceeding consensus forecasts as surging exports countered subdued consumer spending. Analysts warned that greater dependence on overseas demand was worsening structural imbalances.

Growth target within reach

Analysts expect Beijing to achieve its 2026 growth target of 4.5%-5.0% without further stimulus, supported by the year’s strong opening performance and modest fiscal and monetary measures introduced recently.

Figures published on Monday showed that growth in retail sales continued to trail industrial production. The property downturn also persisted, after substantially diminishing household wealth over five years.

Releases issued last week showed subdued consumer inflation alongside an export increase exceeding one-third. Together, the figures pointed to an economy gaining strength in international markets while struggling to deliver prosperity domestically.

Businesses turn to overseas buyers

Weak demand at home has led Zhang Chao’s motorbike headlight company to largely give up domestic sales and concentrate on exports. Its overseas orders have doubled this year.

Zhang, who oversees the company’s Southeast Asia operations, said competition in China left no profit, while entering overseas markets was somewhat easier.

Sluggish consumer demand has also sharpened price competition, pushing businesses to reduce expenses, including payroll costs.

Households limit spending

Laura Shi, who lost her sales job in June, nevertheless took a road trip during China’s week-long October national holidays. To reduce hotel expenses, she spent most nights sleeping in her car.

Shi said the disadvantages included being unable to shower and having to contend with noise outside.

The growing imbalance in China’s expansion is prompting responses elsewhere in the world.