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Analyst
3Q26 Growth Edges Up To 4.5% yoy; September Data Mixed
- China’s 3Q26 real GDP growth edged up to 4.5% yoy (+0.2ppt qoq), slightly above consensus of 4.4% yoy, bringing 9M26 growth to 4.6% yoy. The secondary sector led the improvement, with quarterly IP growth rising to 5.1% yoy from 4.7% yoy, while the quarterly FAI contraction narrowed to 10.2% yoy from 13.1% yoy.
- September data was mixed. Retail sales growth rebounded to 1.1% yoy (+0.7ppt mom), above consensus of 0.5% yoy, and industrial production growth rose to 5.5% yoy (+0.3ppt mom). However, FAI fell 7.2% ytd yoy as property FAI ytd deepened to -20.6% yoy, worse than expected. The unemployment rate improved to 5.2%.
- With 9M26 growth at 4.6% yoy and a low 4Q25 base for comparison, we raise our 2026 real GDP forecast to 4.5% yoy from 4.2% yoy. The changes are supported by stronger-than-expected contribution from external demand.
What’s New
- China’s 3Q26 real GDP growth edged up to 4.5% yoy, up from 2Q26’s 4.3% yoy but below 3Q25’s 4.8% yoy, bringing 9M26 growth to 4.6% yoy. On a qoq basis, GDP grew 1.2% in 3Q26, above Bloomberg’s consensus estimate of 1.0% and up from 0.9% in 2Q26. By industry, the tertiary sector posted 5.2% yoy (+0.1ppt qoq) growth, while the secondary sector led the improvement by growing 3.4% yoy (+0.4ppt qoq) and the primary sector rose 3.6% yoy (-0.1ppt qoq). Quarterly IP growth improved to 5.1% yoy (+0.4ppt qoq) and quarterly retail sales growth to 0.7% yoy (+0.5ppt qoq), while the quarterly FAI contraction narrowed to 10.2% yoy (+2.9ppt qoq). Quarterly retail sales growth also picked up to 0.7% yoy (+0.5ppt qoq) from 2Q26’s 0.2% yoy, but remained well below 1Q26’s 2.4% yoy. With consumption growth still below 1% yoy against IP growth of 5.1% yoy, the recovery remains led by production rather than consumption.
- Industrial production growth rose to 5.5% yoy in September (+0.3ppt mom), in line with Bloomberg’s consensus estimate of 5.5% yoy. In September, 31 of 41 major industries maintained yoy growth in output value (vs 29 in August). High-tech manufacturing continued to stand out (15.3% yoy, -1.4ppt mom), led by industrial robots (18.9% yoy), integrated circuits (18.4% yoy) and NEVs (16.9% yoy), even as overall automobile output fell 5.7% yoy, whereas mobile phones posted the steepest decline (-26.9% yoy). In contrast, commodity-related output remained weak, with crude oil processing volume down 8.4% yoy, cement down 5.3% yoy and steel products down 3.8% yoy. External demand remained a key driver, with export delivery value rising 17.0% yoy (August: 11.1% yoy). Overall, 3Q26 IP growth of 5.1% yoy improved from 2Q26’s 4.7% yoy.
3Q26 Growth Edges Up To 4.5% yoy; September Data Mixed
- China’s 3Q26 real GDP growth edged up to 4.5% yoy (+0.2ppt qoq), slightly above consensus of 4.4% yoy, bringing 9M26 growth to 4.6% yoy. The secondary sector led the improvement, with quarterly IP growth rising to 5.1% yoy from 4.7% yoy, while the quarterly FAI contraction narrowed to 10.2% yoy from 13.1% yoy.
- September data was mixed. Retail sales growth rebounded to 1.1% yoy (+0.7ppt mom), above consensus of 0.5% yoy, and industrial production growth rose to 5.5% yoy (+0.3ppt mom). However, FAI fell 7.2% ytd yoy as property FAI ytd deepened to -20.6% yoy, worse than expected. The unemployment rate improved to 5.2%.
- With 9M26 growth at 4.6% yoy and a low 4Q25 base for comparison, we raise our 2026 real GDP forecast to 4.5% yoy from 4.2% yoy. The changes are supported by stronger-than-expected contribution from external demand.
What’s New
- China’s 3Q26 real GDP growth edged up to 4.5% yoy, up from 2Q26’s 4.3% yoy but below 3Q25’s 4.8% yoy, bringing 9M26 growth to 4.6% yoy. On a qoq basis, GDP grew 1.2% in 3Q26, above Bloomberg’s consensus estimate of 1.0% and up from 0.9% in 2Q26. By industry, the tertiary sector posted 5.2% yoy (+0.1ppt qoq) growth, while the secondary sector led the improvement by growing 3.4% yoy (+0.4ppt qoq) and the primary sector rose 3.6% yoy (-0.1ppt qoq). Quarterly IP growth improved to 5.1% yoy (+0.4ppt qoq) and quarterly retail sales growth to 0.7% yoy (+0.5ppt qoq), while the quarterly FAI contraction narrowed to 10.2% yoy (+2.9ppt qoq). Quarterly retail sales growth also picked up to 0.7% yoy (+0.5ppt qoq) from 2Q26’s 0.2% yoy, but remained well below 1Q26’s 2.4% yoy. With consumption growth still below 1% yoy against IP growth of 5.1% yoy, the recovery remains led by production rather than consumption.
- Industrial production growth rose to 5.5% yoy in September (+0.3ppt mom), in line with Bloomberg’s consensus estimate of 5.5% yoy. In September, 31 of 41 major industries maintained yoy growth in output value (vs 29 in August). High-tech manufacturing continued to stand out (15.3% yoy, -1.4ppt mom), led by industrial robots (18.9% yoy), integrated circuits (18.4% yoy) and NEVs (16.9% yoy), even as overall automobile output fell 5.7% yoy, whereas mobile phones posted the steepest decline (-26.9% yoy). In contrast, commodity-related output remained weak, with crude oil processing volume down 8.4% yoy, cement down 5.3% yoy and steel products down 3.8% yoy. External demand remained a key driver, with export delivery value rising 17.0% yoy (August: 11.1% yoy). Overall, 3Q26 IP growth of 5.1% yoy improved from 2Q26’s 4.7% yoy.
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