China's economy expanded 4.5% in the July-September quarter from a year earlier, official data showed on Monday, as a surge in exports and strong factory output offset persistent weakness at home. The figure from the National Bureau of Statistics beat the 4.4% forecast in a Reuters poll and improved on the 4.3% recorded in April-June, the slowest pace in more than three years. On a quarterly basis, the economy grew 1.2%, up from 0.9% in the previous period. Growth for the first nine months stood at 4.6%, within the government's 2026 target range of 4.5%-5%.

Exports remain the main engine. China's trade surplus for January-September reached $938 billion, putting it on course to exceed last year's record $1.2 trillion. Higher US tariffs have dented bilateral trade, so exporters have turned to Southeast Asia, Latin America and Europe, with high-tech goods such as semiconductors and hybrid and electric vehicles leading the way. China shipped about 919,000 passenger vehicles abroad in September, and exports for the first nine months topped 7.1 million, up more than 70% from a year earlier. September data also showed some improvement at home: retail sales rose 1.1%, the fastest pace since March, and industrial output grew 5.5%, the strongest in six months.

Yet the recovery is uneven. A years-long property slump has eroded household wealth and pushed up savings, while property investment fell 20.6% in the first nine months. Fixed-asset investment declined 7.2% over the same period, and infrastructure investment shrank 4.2%. Beijing has responded with targeted support, including expanded help for home buyers, cheaper credit for infrastructure and technology, 550 billion yuan in unused local-government debt quotas, and an 800 billion yuan policy-based financing tool. But policymakers have held back from broad stimulus, betting that exports, helped by the global AI-driven tech boom, will keep growth on target.

Economists warn that the headline number hides a two-speed economy. Max Zenglein of The Conference Board called it "an increasingly poor indicator" of overall performance, citing widening gaps across industries, regions and households. Ecaterina Bigos of BNP Paribas Asset Management said the tech-driven, export-reliant model has created limited jobs and income gains. Her Conference Board colleague Yuhan Zhang said the economy is still driven by supply and production, and that stronger household consumption would make growth more balanced. An NBS official said new drivers such as high-end manufacturing and the digital economy contributed over 40% of growth in the first three quarters.

The export reliance is also drawing pushback abroad. The European Union, which runs a deficit with China of more than $1.1 billion a day, saw Chinese exports to it rise 16% in nine months. Earlier this month the bloc agreed to cap Chinese hybrid vehicle imports at 350,000 a year, roughly halving them over the next few years, though some member states want further curbs. ING's Lynn Song said trade imbalances "will be difficult to resolve quickly." Central bank governor Pan Gongsheng said last Friday that deficit and surplus countries should cooperate and that China is committed to expanding domestic demand, while Beijing has said it does not seek a large trade surplus.