China’s growth accelerates as AI boom helps boost exports
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China’s economic growth picked up in the three months to the end of September, rebounding from a three-year low as the artificial intelligence (AI) boom helped boost exports.
The world’s second largest economy grew by 4.5% in the third quarter, up from the previous period but below the 5% expansion recorded from January to March, according to official Chinese data.
The latest figure is at the bottom end of Beijing’s annual growth target of 4.5%-5%, which analysts have said gives policymakers room to address the country’s economic challenges.
While exports have helped offset weak spending at home, global trade tensions and uncertainty over AI investments are clouding its outlook.
China’s National Bureau of Statistics said on Monday that the economy “sustained steady development against pressure” and showed “momentum with new growth drivers and improving structure”.
With exports climbing, China’s trade surplus – the amount of goods and services it sells abroad compared to what it buys from other countries – is on track to overtake the record $1.2tn (£900bn) seen last year.
Sales of high-tech goods rose by 14.3% while the production of both batteries and industrial robots grew by more than 29%, official figures showed.
Oxford Economics researcher Sheana Yue said manufacturing and high-tech exports have boosted China’s growth, despite weak investment and domestic spending.
But property investment fell by more than 20% in the first nine months from the same period last year, official data also showed.
China’s economy has been struggling to shake off a long-running property slump, after years of overbuilding and excessive borrowing by private developers.
There are still no signs that this trend will end soon, Yue said.
Trade uncertainties and geopolitical issues have also made Chinese consumers more “pessimistic” and unwilling to spend, she added.
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The effects of Beijing’s targeted support measures for businesses have yet to be seen, said Dave Chia, an economist at Moody’s Analytics.
Several risks stand out from the data, including China’s reliance on a “single external engine” in exports, he added.
The technology industry has been a key driver of China’s growth in recent quarters.
Global demand for computer chips and other components used to build AI data centres has helped to ease pressure on Beijing and cushion the impact of sluggish domestic consumption.
Chinese businesses have leaned heavily on exports as a prolonged property slump, weak wage growth and high youth unemployment have weighed on consumer spending at home.
In September, Beijing unveiled a raft of support measures, including lower interest rates for some businesses and subsidies for property buyers, in an effort to boost the economy.
But Beijing is facing a backlash from Western economies – including the US and European Union – as manufacturers struggle to compete with large amounts of cheap Chinese goods.
There are also concerns over the billions of dollars being spent on AI infrastructure and whether the companies making those investments can deliver on their promises of generating huge profits.
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