China's exports drive growth as domestic demand remains weak

China's gross domestic product grew 4.5% in the July-September quarter, surpassing market forecasts as export-led growth compensated for softer internal demand. The performance underscores Beijing's reliance on foreign sales to maintain economic momentum amid persistent headwinds in the domestic market.

The property sector remains a significant drag on consumption, with weak real estate activity dampening household spending and investment. This structural weakness in domestic demand has prompted policymakers to intensify efforts to stimulate growth through export competitiveness and targeted fiscal measures.

The International Monetary Fund has projected China will sustain 4.5% growth in 2026, while Beijing itself has set a full-year growth target of 4.5% to 5% for the current period. Achieving these targets will require continued export strength even as trading partners express growing concerns about trade imbalances.

The divergence between export strength and domestic weakness has intensified discussions among China's trading partners on addressing persistent trade disparities. Regional economies, including India, are closely monitoring Chinese economic trends and their implications for regional trade dynamics and currency movements.