China’s Q3 Growth Rebounds on AI-Fueled Export Surge Amid Domestic Drag

China’s economic expansion accelerated in the third quarter, recovering from a three-year low as a surge in artificial intelligence-related exports provided a critical buffer against domestic headwinds.

Official data released Monday showed the world’s second-largest economy grew 4.5% in the three months through September, improving on the previous quarter but trailing the 5% pace recorded in the first quarter.

The reading sits at the lower bound of Beijing’s official annual target of 4.5% to 5%, a position analysts suggest affords policymakers space to implement further support measures.

Although robust overseas shipments have counteracted sluggish domestic consumption, the outlook remains clouded by escalating trade tensions and questions over the sustainability of AI-driven investment.

The National Bureau of Statistics stated the economy “sustained steady development against pressure,” highlighting momentum from new growth drivers and an improving structural mix.

Buoyed by climbing exports, China’s trade surplus—the gap between goods and services sold abroad versus imports—is poised to surpass last year’s record of $1.2 trillion.

However, property investment plunged more than 20% in the first nine months compared to the same period last year, underscoring the persistent drag from the real estate sector.

Oxford Economics researcher Sheana Yue noted that manufacturing and high-tech exports have propped up growth, even as investment and domestic spending remain fragile.

The economy continues to grapple with a prolonged property downturn rooted in years of overbuilding and excessive leverage among private developers.

Yue warned there are few indications the property correction will bottom out in the near term.

Additionally, trade uncertainties and geopolitical friction have made Chinese consumers increasingly pessimistic, further dampening spending appetite.

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