China’s Economic Growth Rebounds to 4.5% as AI Boom Boosts Exports

China’s economic growth accelerated in the three months to the end of September, recovering from a three-year low as rising demand for artificial intelligence (AI) technology boosted exports.

China’s GDP growth picks up in the third quarter

The world’s second-largest economy grew by 4.5% in the third quarter, up from 4.3% in the previous quarter. However, growth remained below the 5% expansion recorded in the first quarter.

The latest figures are at the lower end of the Chinese government’s annual growth target of 4.5% to 5%. Analysts say this gives policymakers room to introduce further measures to address the country’s economic challenges.

Exports offset weak domestic spending

Exports have helped offset weak domestic spending, although global trade tensions and uncertainty surrounding AI investment are clouding China’s economic outlook.

As exports continue to rise, China’s trade surplus—the difference between the goods and services it sells abroad and what it buys from other countries—is on track to surpass the $1.2 trillion (£900 billion) recorded last year.

The technology industry has been a major driver of China’s economic growth in recent quarters. Global demand for computer chips and other components used to build AI data centres is helping ease pressure on the Chinese government and cushion the impact of weak domestic consumption.

China’s domestic economy remains under pressure

Chinese companies are relying heavily on exports as a prolonged real estate recession, slowing wage growth and high youth unemployment weigh on domestic consumer spending.

In September, the Chinese government announced several support measures aimed at revitalising the economy, including interest rate cuts for some businesses and subsidies for property buyers.

Trade tensions and AI investment risks

However, Beijing faces a backlash from Western economies, including the United States and the European Union, as manufacturers struggle to compete with a flood of cheap Chinese products.

There are also concerns about the billions of dollars being spent on AI infrastructure and whether the companies making those investments will be able to deliver on promises of generating huge profits.

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