China growth outlook keeps 2026 target within reach despite weak demand

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China growth outlook 2026

Highlights

A Reuters poll of 50 economists projects China's Q3 GDP growth at 4.4% year on year, up from 4.3% in Q2 but below July's 4.6% forecast.
Beijing implements new policy support in late September, including targeted rate cuts, mortgage subsidies, and 550 billion yuan ($82.17 billion) in unused debt quotas.
Solid exports and factory output offset weak domestic demand, with China's trade surplus on track to exceed last year's record $1.2 trillion despite persistent property sector weakness.

Third-quarter forecasts and policy support

As reported by Reuters, a poll of 50 economists projects China's gross domestic product grows 4.4% year on year in July through September, up from 4.3% in the second quarter but below the 4.6% expansion expected in a July poll. The projected pace remains under the lower end of the official 4.5% to 5% growth target, highlighting the limited scale of the recovery.

Beijing rolls out fresh support measures in late September, including targeted interest-rate cuts and mortgage subsidies, after the cabinet pledges stronger action to shore up growth and meet its annual goal. Earlier in October, authorities also allocate 550 billion yuan, or $82.17 billion, in unused government debt quotas to ease local government financial strains and support infrastructure spending.

On a quarterly basis, the economy is forecast to expand 1.1% in the third quarter, quickening from 0.9% in April through June. The government is due to publish third-quarter GDP figures, along with September retail sales, industrial production and investment data, at 0200 GMT on October 19.

Trade strength offsets domestic weakness

China's economy continues to show uneven momentum, with AI-fuelled exports and solid factory output helping offset weak household spending and subdued private investment during a prolonged property slump. Data released on Wednesday show the country's trade surplus widens more than expected in September as exports surge, keeping China on track to exceed last year's record surplus of $1.2 trillion and potentially adding to trade tensions with major partners.

Goldman Sachs analysts say the prospect of a second straight quarter of growth below 4.5% year on year increases pressure on policymakers to secure the full-year target. They add that while recent measures should help the government reach that goal, local government financing constraints and weak investment incentives could still weigh on implementation.

Economists in the poll expect growth to edge up to 4.5% in the fourth quarter. For 2026 as a whole, China's GDP growth is forecast to cool to 4.5% from 5.0% last year, before easing further to 4.4% in 2027, while analysts expect the central bank to keep its loan prime rates and banks' reserve requirement ratio unchanged through the first quarter of 2027 because firmer producer prices and a pickup in consumer inflation limit room for major monetary easing.

In our earlier article on the IMF’s call for larger fiscal stimulus in China, we noted that policymakers face renewed pressure to boost domestic demand as the economy flirts with deflation. The IMF argued that current support measures are limited in scale, with growth increasingly reliant on external demand, and highlighted the prolonged property slump alongside the need for stronger confidence- and consumption-boosting policies.

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