China Grew 4.5% in Q3 as AI Export Boom Offset Weak Consumer Spending

China's economy grew 4.5% in the three months to the end of September, rebounding from a three-year low as the artificial intelligence boom lifted exports.

The world's second-largest economy expanded 4.3% in the second quarter. Growth reached 5% between January and March. The latest figure sits at the bottom end of Beijing's annual growth target of 4.5% to 5%, a level analysts say gives policymakers room to confront the country's economic challenges.

Exports have offset weak spending at home. But global trade tensions and uncertainty over AI investments cloud the outlook.

How big is the trade surplus now?

China's trade surplus — the gap between what it sells abroad and what it buys from other countries — is on track to overtake the record $1.2tn (£900bn) recorded last year.

The technology industry has driven China's growth in recent quarters. Global demand for computer chips and other components used to build AI data centres has eased pressure on Beijing and cushioned the impact of sluggish domestic consumption.

Chinese businesses have leaned on exports because a prolonged property slump, weak wage growth and high youth unemployment have weighed on consumer spending at home.

What has Beijing done about it?

In September, Beijing unveiled a raft of support measures:

• Lower interest rates for some businesses
• Subsidies for property buyers

The package aims to boost an economy where households keep their wallets closed.

Why are Western economies pushing back?

Beijing faces a backlash from Western economies, including the US and the European Union. Manufacturers there struggle to compete with large amounts of cheap Chinese goods.

A second risk sits inside the AI boom itself. Investors have raised 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.

The 4.5% print shows exports can carry growth for now. Whether that holds depends on how long AI spending continues and how far trade tensions escalate.

By Daniel Okafor