China’s economy regained momentum in Q3, with GDP up 1.2% quarter-on-quarter and 4.5% year-on-year, supported by robust exports and AI-related industrial demand, while household consumption remained soft. Industrial production growth was underpinned by external demand and tech-linked orders. Fixed-asset investment ended six straight months of month-on-month declines, helped by firmer manufacturing and infrastructure spending, even as consumption spending growth lagged disposable income growth.
GDP Growth Forecasts and Policy Measures
The bank kept its Q4 and full-year 2026 GDP growth forecasts unchanged at 4.7% and 4.6% respectively, pointing to recent policy moves such as a first-home interest subsidy programme and the use of accumulated unused local government debt quotas.
Inflation Outlook and Contributing Factors
On prices, it lowered its 2026 CPI forecast to 0.9% on weaker energy price transmission and ongoing food price deflation, but said elevated global oil and metal prices, together with higher costs for AI-related inputs and products, could lift PPI inflation above 3% this year.
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