China economic growth accelerates to 4.5% as AI export boom offsets domestic slump

China's economic growth picked up to 4.5% in the third quarter, supported by a surge in high-tech exports and global demand for artificial intelligence components that helped counter a deepening real estate slump at home.

Data released by the National Bureau of Statistics shows the expansion puts the world's second-largest economy back on track to meet Beijing's official full-year growth target of between 4.5% and 5%. The bureau said the economy sustained steady development against pressure while generating momentum through new growth drivers.

The acceleration was driven largely by overseas buyers purchasing Chinese hardware, components, and industrial machinery. Exports of high-tech products jumped 14.3% during the period, while output for both industrial robots and batteries surged by more than 29%. China's total trade surplus is now on course to surpass last year's record of $1.2 trillion (£900 billion).

China economic performance in Q3

However, the strong export performance masks persistent domestic fragility. Property investment plummeted by more than 20% over the first nine months of the year compared to the same period last year, reflecting the ongoing fallout from developer debt defaults and years of overbuilding.

Weak wage growth and persistent youth unemployment have further suppressed household spending, leaving domestic consumers hesitant to spend despite recent government intervention. In September, Chinese authorities announced targeted economic support, cutting interest rates for selected businesses and providing subsidies to home buyers to stimulate domestic activity.

Economists have warned that relying on foreign buyers carries its own risks, particularly as trade tensions mount with the United States and the European Union over cheap Chinese manufacturing exports. Questions also remain over whether heavy capital investment in global AI infrastructure will deliver expected long-term financial returns.

Dave Chia, an economist at Moody's Analytics, noted that relying on exports as a single external engine leaves the economy vulnerable, while Oxford Economics researcher Sheana Yue highlighted that ongoing trade uncertainties continue to make domestic consumers cautious.