China's GDP grows 4.5% in third quarter, lifted by AI-linked exports

China's economy grew 4.5% in the third quarter of 2026 from a year earlier, the country's National Bureau of Statistics (NBS) said on Monday (Oct. 19). The figure beat the 4.4% median forecast of economists polled by Bloomberg and picked up from 4.3% in the second quarter. Compared with the previous three months, gross domestic product (GDP), the total value of goods and services produced in the country, rose 1.2%. Growth for January through September came to 4.6%, with GDP totaling 107.1 trillion yuan.

The pickup came mainly from overseas sales. Chinese exports rose by more than a third in September, according to data released the previous week, driven by global demand for chips and equipment tied to artificial intelligence. Analysts at Dutch bank ABN Amro attributed the stronger GDP reading to continued export strength amid the global AI and tech cycle. China's trade surplus, the gap between what the country sells abroad and what it buys, is on track to top the record $1.2 trillion posted in 2025, according to Reuters and Bloomberg.

The domestic picture is weaker. Retail sales rose 1.1% in September, up from 0.4% in August but still sluggish. Fixed-asset investment, which covers spending on construction, machinery and infrastructure, fell 7.2% in the first nine months of the year. Property investment dropped 20.6% over the same period, a steeper decline than the 19.9% drop through August. Industrial output grew 5.5% in September, and the urban unemployment rate eased to 5.2% from 5.3% in August, according to Bloomberg. By sector, services grew 5.2% year to date, while industry and construction expanded 3.8%. The government's official growth target for 2026 is 4.5% to 5%.

What it means for businesses

China plays a central role in Brazil's export basket. From January through September 2026, Brazilian sales to China totaled $84.68 billion, up 12.0% from the same period of 2025, according to MDIC, Brazil's Ministry of Development, Industry, Trade and Services. That is roughly 30% of Brazil's total exports over the period, which came to $284.65 billion. Over the same months, Brazilian exports to the European Union totaled $44.15 billion.

The third-quarter data describe an economy growing more on the back of industry and exports than household consumption. For Brazilian companies that sell to China or are part of those supply chains, Chinese domestic demand and the still-contracting property sector are variables to watch, along with the pace of China's exports. Analysts at ANZ described the risks to Chinese growth in the coming months as significant.

Reuters reporting shows competition is also fierce inside China itself. Zhang Chao, a maker of motorcycle headlights interviewed by the agency, said the market "is very competitive and there's no profit" (translated from Portuguese). For companies that import Chinese inputs and goods, rising industrial output alongside moderate domestic consumption is one of the factors shaping prices and supply of those products.

“China's export expansion is not unlimited”

— Michelle Lam, Société Générale, speaking to Reuters (translated from Portuguese)

What to watch next

• Annual target: with 4.6% growth through September, China is within the 4.5% to 5% range set by the government for 2026.
• Consumption: whether retail sales sustain September's recovery (1.1%, up from 0.4% in August).
• Property: investment in the sector fell 20.6% in nine months, and analysts quoted by Reuters and Bloomberg point to it as the main weak spot.
• Exports: whether China's overseas sales, supported by AI-related demand, keep their pace in the fourth quarter.
• Brazil: MDIC's next monthly trade release will show whether sales to China maintain their 12% growth for the year.