Abstract:
Against the backdrop of the continued expansion of the global artificial intelligence industry, China's economic growth picked up in the third quarter. The construction of artificial intelligence data centers has driven growth in demand for chips, computing equipment and related electronic products, providing new impetus for China's manufacturing exports and helping the world's second-largest economy alleviate the pressure caused by weak domestic consumption and the continued downturn in the real estate market. However, strong export performance does not mean that all areas of the economy have recovered simultaneously. Residential consumption, private investment and the real estate market still face challenges.
China's gross domestic product (GDP) grew by 4.5% year-on-year in the third quarter, higher than the 4.3% in the second quarter but lower than the 5% in the first quarter. Economic growth in the third quarter ended the previous downward trend, showing an improvement in economic activity. However, the 4.5% growth rate is still at the lower limit of China's full-year economic growth target range.
The Chinese government previously set its economic growth target for 2026 at 4.5% to 5%. The rebound in growth in the third quarter means that it is still possible to achieve the target for the whole year, but the power of economic growth is unevenly distributed. Overseas demand for products related to the artificial intelligence industry, manufacturing exports, and some policy support measures have provided support for the economy; at the same time, problems such as insufficient domestic consumer demand and continued pressure on the real estate market still exist.
The artificial intelligence industry is becoming an important driving force for China's export growth. As global technology companies increase investment in artificial intelligence infrastructure, demand for chips, servers, computing equipment and other electronic components required to build large-scale data centers increases. China has a large-scale manufacturing system and has certain advantages in electronic product production, parts supply and related equipment manufacturing, so it is able to obtain orders from the expansion of the global artificial intelligence industry chain.
This trend has also changed part of the structure of China's export growth. In the past, changes in overseas demand were usually closely related to consumer electronics, clothing, furniture and other traditional manufacturing products; now, high-tech products required for the construction of artificial intelligence data centers have also begun to play a more significant role. For Chinese manufacturers, the global investment boom in artificial intelligence has created new market opportunities and provided some industries with a buffer against fluctuations in demand in other markets.
Data released by China Customs show that in September 2026, China’s export volume increased by 36.3% year-on-year. The strong demand for artificial intelligence-related products is one of the important factors for outstanding export performance. Relevant reports pointed out that the growth in exports of semiconductors, data processing equipment and other technology products has provided important support for the expansion of China's trade surplus.
As exports continue to grow, China's full-year trade surplus is expected to exceed the record of approximately US$1.2 trillion set in 2025. The trade surplus refers to the part in which the value of a country's exports of goods and services is higher than the value of its imports. A continuously expanding surplus means that the scale of China's products sold to overseas markets has further increased relative to the scale of its imports.
However, the export boom also reflects the Chinese economy's increasing dependence on overseas demand. For an economy with a large domestic market, exports can provide support when domestic demand is weak, but if consumption and investment cannot recover for a long time, economic growth may become more dependent on the external market environment.
A prominent problem currently facing China is that domestic consumption growth still lacks sufficient momentum. The long-term downturn in the real estate market has affected the wealth expectations of some families. Weak wage growth and youth employment pressure have also made some residents cautious in consumption. At the same time, corporate investment willingness is affected by factors such as uncertain demand prospects, and private investment is still under pressure.
The real estate market is especially an important factor affecting the domestic economy. The real estate industry and its related industrial chains have played an important role in China's economy in the past. Real estate development, construction, home decoration and related consumption can drive a large number of jobs and economic activities. However, as the real estate market adjustment continues, house sales, development investment and related industries are affected, and real estate no longer provides the strong driving force for economic growth as it did in the past.
This also explains why the overall recovery of the Chinese economy still appears uneven despite its strong manufacturing export performance. The export orders brought by the artificial intelligence industry can support the production and investment of related enterprises, but they cannot automatically translate into an increase in the income of all households, nor can they directly solve the problems faced by the real estate market and domestic consumption.
In order to stabilize the economy, the Chinese government announced a series of support measures in September, including reducing financing costs for some companies and providing subsidies to qualified home buyers. Relevant policies aim to ease business operating pressures, improve real estate market demand, and promote the gradual recovery of economic growth momentum.
But the effect of the policy remains to be seen. Reducing corporate financing costs can help reduce some operating burdens, but it may not immediately prompt companies to expand investment. If companies believe that future orders and consumer demand are still insufficient, they may choose to postpone investment plans even if they obtain cheaper financing. Similarly, home purchase subsidies can reduce costs for some home buyers, but whether they can significantly improve the real estate market also depends on residents' income expectations, housing price trends and confidence in future economic conditions.
At the same time, China's export growth has also attracted the attention of major trading partners such as the United States and the European Union. The competitiveness of Chinese manufacturers in the fields of electric vehicles, electronic products, machinery and other industrial products continues to increase. Some overseas companies are worried that the entry of a large number of competitively priced Chinese goods into the domestic market may put pressure on local manufacturers.
Europe is particularly concerned about the trade imbalance with China. As China's exports to the EU increase, some European industries are facing stronger price competition, and related disputes involve electric vehicles, industrial products and other manufacturing fields. Trading partners may respond through tariffs, import restrictions or other trade policies, thereby increasing the uncertainty faced by Chinese export companies.
This leaves the Chinese economy facing a complex situation: global investment in artificial intelligence provides growth opportunities for exports, but the stronger the exports, the more prominent trading partners' concerns about industrial competition and trade imbalances may become. If more countries adopt trade restrictive measures, Chinese manufacturers may need to further find new markets or adjust their products and production layout.
There are also uncertainties in the artificial intelligence industry itself. In recent years, large global technology companies have invested heavily in building data centers, purchasing advanced chips and expanding artificial intelligence services. These investments have driven growth in demand for computing equipment and related products, and have also allowed some suppliers to obtain considerable orders.
However, whether investment in artificial intelligence infrastructure can maintain its current growth rate in the long term still depends on whether relevant companies can obtain sufficient income from artificial intelligence services and whether the return on investment can meet expectations. If the commercial returns from AI applications fall short of expectations, technology companies may slow capital spending, affecting demand for chips, servers and other equipment.
Therefore, although Chinese export companies can benefit from the current artificial intelligence investment boom, they also need to face the risks of future demand changes. Relying on a few fast-growing industries to obtain orders may improve operating conditions in the short term, but it may not necessarily provide stable guarantee for long-term economic growth.
From the perspective of the broader economic structure, the core issue that China needs to solve now is how to make the growth of exports and manufacturing more effective in driving domestic consumption and investment. Strong exports can create jobs, increase corporate income and improve foreign trade performance, but if these benefits are not widely transmitted to the residential sector, insufficient domestic demand may still persist.
At the same time, economic growth also requires more diverse driving forces. If domestic consumption, service industries and private investment can gradually recover, China's economy will not have to rely too much on a few export industries or overseas investment cycles. On the contrary, if domestic demand is weak for a long time, companies may continue to invest more resources in overseas markets, further deepening the dependence of economic growth on exports.
China's GDP growth rebounded to 4.5% in the third quarter, indicating that the economy has improved after experiencing a slowdown in the second quarter. The export demand related to the artificial intelligence industry is an important background for this change, but the overall economy is still in the process of structural adjustment. Export growth can provide support for manufacturing and some high-tech industries, but it is difficult to solve deep-seated problems such as real estate downturn, insufficient household consumption and weak private investment alone.
Next, whether China's economy can maintain stable growth will not only depend on whether global investment in artificial intelligence continues, but also on whether domestic policies can effectively improve residents' willingness to consume, corporate investment confidence, and real estate market expectations. At the same time, changes in the international trade environment will also affect the sustainability of China's manufacturing exports.
Driven by the boom in the artificial intelligence industry, China's export performance remains strong, but whether this growth model can be transformed into a more balanced and sustainable economic recovery remains a key test for the Chinese economy in the coming period.
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