China Records 4.8% GDP In Q3 Ahead Of Long-Term Policy Plans

The government has unveiled some stimulus packages in the past year as exports picked up, and Chinese stocks saw strong gains. However, risks have been renewed as US-China trade tensions enter a new phase.  

China’s gross domestic product (GDP) was 4.8% in the July-September quarter; this growth is the weakest pace in a year as the economy grapples with a prolonged property crisis and trade tensions owing to Washington’s tariff uncertainty. This has left Beijing’s policymakers worried over how GDP drivers can be rebalanced to increase consumption. 

The government has unveiled some stimulus packages in the past year as exports picked up, and Chinese stocks saw strong gains. However, risks have been renewed as US-China trade tensions enter a new phase. While there is a chance that the Chinese authorities could release yet another stimulus package, analysts are divided on whether the government will decide in favour of these measures by the end of 2025. 

This quarter’s 4.8% GDP growth rate is a drop from Q2’s 5.2%. However, China has not revised its growth expectations for 2025 and is still targeting a 5% overall growth rate for the full year. Market observers and policymakers were once in agreement that China would not be able to achieve its 5% target due to Trump tariffs and export restrictions.  

However, the figures from the past three quarters have compelled them to change their stance. Analysts now believe that Beijing could achieve an overall 5% expansion. China has proved that it is capable of withstanding massive trade shocks and can still reach its development milestones, emphasising its commitment towards its policies. 

According to the National Bureau of Statistics data, GDP grew 1.1% in Q3, compared to the forecast of 0.8% expansion and a revised 1.0% gain from Q2. 

With its economy heavily reliant on manufacturing and exports, these trade tensions with the US have spotlighted China’s need to diversify its markets. Industry experts are also positive that this could result in the government making some drastic changes to improve domestic consumption. 

Asia’s largest economy recorded an annual export rise of 8.3% in September, compared with a 4.4% increase in August. Despite this increase, recent data signalled that China’s economy is losing momentum and mounting deflationary pressures. Authorities have taken efforts to reduce overcapacity and increasing competition among firms, but to no avail. 

While China’s situation is not as bad as analysts had predicted it would be in the wake of Trump tariffs, these positive figures have done little to ease investor and exporter concerns. With President Trump threatening to increase tariffs from November 1 by an additional 100% exporters are left with no choice but to scope out new markets. 

Beijing authorities are due to discuss the country’s 15th five-year development plan this week, and high-tech manufacturing is rumoured to be the first on their list of priorities as rivalry with Washington gets fiercer by the day. 

For hints on the economic strategy for the upcoming year, investors are also anticipating the Central Economic Work Conference and a Politburo meeting in December. The fourth quarter is expected to be structurally different due to low levels of consumption and high levels of investment. After all, negative investment growth is not what policymakers want to see.  

Since September, supportive measures that are focused on public investment projects have been in place, such as the frontloaded government bond issue and policy funding mechanisms. Separate September activity statistics, also released on Monday, showed that industrial output increased at a three-month high of 6.5% year-over-year, surpassing a prediction of 5.0% and accelerating from a 5.2% increase in August. 

While these figures do not necessarily paint a picture of a crisis-struck economy, it does warrant caution, and the government must take bold initiatives to protect the domestic economy and the international trade order dependent on China.