China’s economic growth driven by AI ​​boom

Roaring exports lifted China’s economic growth in the third quarter of this year, with factory output growing much faster than consumer spending.

China’s gross domestic product grew by 4.5% year-on-year between July and September, according to the National Bureau of Statistics, beating economists’ expectations and improving from the second quarter’s 4.3% growth rate. This performance brings China’s growth for the first nine months of the year to 4.6%, keeping the country on track to hit its official annual target of 4.5% to 5% without needing extra stimulus measures. The surge was largely driven by a global boom in artificial intelligence and electronics, which propelled manufacturing output and helped offset ongoing weakness in domestic consumption and the real estate sector.

Digging deeper into the sectoral breakdown, industrial production rose by 5.5% in September alone—accelerating from August’s 5.2%—while retail sales crawled up by a mere 1.1%, reflecting stubbornly sluggish domestic demand. Analysts at Pantheon Macroeconomics and ABN Amro noted that high-tech manufacturing, particularly electronics and AI-related hardware, expanded by a robust 6% year-on-year, highlighting China’s ongoing transition up the global value-added ladder.

However, this export-led manufacturing strength starkly contrasted with continued heavy domestic drags: fixed-asset investment fell by 7.2% over the first nine months, property investment cratered by 20.6%, and infrastructure spending remained weak. While the external tech and AI boom successfully cushioned the blow from a deeply depressed property market and weak local consumer confidence, economists caution that the long-term structural reliance on exports over domestic consumption leaves the economic recovery unbalanced.