China's Q3 Growth Stabilizes at 4.5% Amid Unbalanced Economic Drivers
China's economic growth stabilized at 4.5% in Q3, driven by tech exports and industrial output, while the real estate sector and domestic consumption remain weak.
China's economy is presenting a complex and highly fragmented picture. In a recent review by Julius Baer, economist Sophie Altermatt points out that China's economic growth stabilized in the third quarter of the year, reaching 4.5% compared to the same period last year (a slight increase from 4.3% in the second quarter). However, the growth engines remain unbalanced, as exports and industrial production show impressive resilience while domestic demand and the construction sector continue to weigh on the economy.
Technology and Industrial Production as Growth Drivers
China's primary growth engine continues to be the technology and advanced manufacturing sector. Export growth accelerated in the third quarter, led by mechanical, electrical, and technological products, while industrial production recorded an accelerated growth rate of 5.5% in September. On the other hand, private consumption remained particularly weak from a historical perspective: retail sales rose by only 1.1%, with the Chinese consumer preferring moderate spending on services over purchasing goods.
The Real Estate Crisis and Market Weakness
The main focus of weakness in the Chinese economy continues to be the housing market and investments. While investments in infrastructure and high technology recorded expansion, real estate investments continued to contract at double-digit rates. Data on new home sales and consequently active construction volumes continue to drop sharply, proving that China's real estate sector has not yet reached a turning point or sustainable stabilization.
Forecast and Policy Outlook for 2026
According to Julius Baer, since the growth rate since the beginning of the year stands at 4.6% and is within the official target range of the Beijing administration, the probability of announcing aggressive additional fiscal support measures or incentives is very low. The bank maintains its forecast for China's GDP growth for 2026 at 4.5%. Instead of attempts at artificial short-term growth acceleration, the Chinese administration continues to focus its resources on industrial upgrading, technological advancement, and increasing self-reliance.
Julius Baer is one of Switzerland's and the world's leading and oldest wealth management and private banking institutions. Established in 1890 in Zurich, the bank specializes in wealth management, investment advisory, and global economic research for private and institutional clients. Today, the bank operates in dozens of countries worldwide, manages hundreds of billions of Swiss francs in assets, and is considered one of the most influential entities in international financial markets.
