Economy slows to 4.8% annual growth in July-September, hit by tariffs and slack demand

China’s economy expanded at the slowest annual pace in a year in July-September, growing 4.8%, weighed down by trade tensions with the United States and slack domestic demand.

The July-September data was the weakest pace of growth since the third quarter of 2024, and compares with a 5.2% pace of growth in the previous quarter, the government said in a report yesterday.

In January-September, the world’s second largest economy grew at a 5.2% annual pace. Despite U.S. President Donald Trump’s higher tariffs on imports from China, its exports have remained relatively strong as companies expanded sales to other world markets.

China’s exports to the United States fell 27% in September from the year before, even though growth in its global exports hit a six-month high, climbing 8.3%.

Exports of electric vehicles doubled in September from a year earlier, while domestic passenger car sales climbed 11.2% year-on-year in last month, down from a 15% rise in August, according to data released last week.

Tensions between Beijing and Washington remain elevated, and it’s unclear if Trump and Chinese leader Xi Jinping will go ahead with a proposed meeting during a regional summit at the end of this month.

Xi and other ruling Communist Party members are convening one of China’s most important political meetings for the year this week, where they will map out economic and social policy goals for the country for the next five years.

The economy slowed in the last quarter as the authorities moved to curb fierce price wars in sectors such as the auto industry due to excess capacity.

China is also facing challenges including a prolonged property sector downturnwhich has been affecting consumption and demand.

Data released yesterday showed China’s residential property sales fell 7.6% by value in the January-September period from a year earlier. Industrial output rose 6.5% year-on-year last month, the fastest pace since June, but retail sales growth slowed to 3% from the year before.

Ratings agency S&P estimates nationwide new home sales will fall by 8% in 2025 from the year before and by 6% to 7% in 2026.

The World Bank expects China’s economy to grow at a 4.8% annual rate this year. The government’s official growth target is around 5%.

Chinese shares rose yesterday, with the Hang Seng in Hong Kong climbing 2.3% and the Shanghai Composite index up 0.5%.

A National Bureau of Statistics spokesman said China has a “solid foundation” to achieve its full-year growth target, but cited external complications — including trade friction with the U.S. and other trading partners and protectionist policies in many countries — as reasons for the slowdown.

China’s stronger economic growth in the first half of this year gives it “some buffer” to achieve the growth target, said Lynn Song, chief economist for Greater China at ING Bank.

However, spending during China’s eight-day Golden Week national holiday in October was “mildly disappointing,” reflecting sluggish consumer confidence and demand, Morningstar analysts said in a note this month.

Investments in factories, equipment and other “fixed assets” fell 0.5% in the last quarter, underscoring weakness in domestic demand. It also was reflected in prices, which have continued to fall both at the consumer and the wholesale level.

There’s room for the government to do more, Song said.

“(We) are looking to see if there will be further measures to support consumption and the property market, as the impact from previous policies begins to weaken,” Song said.

Economists are also expecting a rate cut by China’s central bank by the end of the year, which could encourage more spending and investment.

China’s economy is also likely to further slow in 2026, said Jacqueline Rong, chief China economist at BNP Paribas, as property investment in the country “looks (to) continue falling” and the AI boom, which helped lift China’s economy and fueled a stock market rally, is expected to moderate. CHAN HO-HIM, HONG KONG, MDT/AP