China's economy grows 4.6% in Q3, keeping stimulus calls alive

BEIJING, 29 JULY 2026 —

China’s Economy Grows 4.6% in Q3, Fueling Calls for Further Stimulus

BEIJING, Oct 18 (Reuters) — China’s economy expanded 4.6% year-on-year in the third quarter, slightly outpacing expectations but underscoring persistent weakness in property and consumption that is keeping pressure on policymakers to roll out additional stimulus measures.

Gross domestic product (GDP) growth in July–September beat a Reuters poll forecast of 4.5%, though it slowed from 4.7% in the prior quarter, according to data released on Friday. On a quarterly basis, the economy grew 0.9%, up from 0.7% in April–June. While industrial output and retail sales for September also surpassed expectations, the property sector continued to weigh heavily on activity, reinforcing market calls for more government support.

The latest figures arrive as Beijing ramps up efforts to meet its 2024 growth target of around 5%. A Reuters poll projects the economy will expand 4.8% this year—below target—and cool further to 4.5% in 2025. Uneven growth has characterized much of 2024, with industrial production outpacing domestic demand amid a prolonged property downturn and rising local government debt.

Policymakers have signaled a shift toward stimulating consumption, but details of a planned fiscal stimulus package remain pending.

Deflationary risks have intensified as export momentum wanes. China’s export growth decelerated sharply in September, while imports also missed forecasts, suggesting manufacturers are cutting prices to clear inventories ahead of potential tariffs from key trade partners. Consumer inflation unexpectedly eased in September, and producer price deflation deepened, increasing the urgency for Beijing to boost demand as exports—one of the few bright spots this year—lose steam.

In response, China’s finance minister last week pledged to “significantly increase” debt to revive growth, though the total size of the stimulus remains unspecified. Reports from Caixin Global indicate authorities may raise an additional 6 trillion yuan ($842.6 billion) via special treasury bonds over three years to bolster the economy. Earlier, Reuters reported plans to issue about 2 trillion yuan in special sovereign bonds this year as part of fresh fiscal measures.

The People’s Bank of China (PBOC) has already taken aggressive steps, unveiling its most substantial monetary support since the COVID-19 pandemic in late September. Measures include interest rate cuts, a 1 trillion yuan liquidity injection, and targeted support for the property and stock markets. Analysts polled by Reuters expect further easing in the fourth quarter, including a 20-basis-point cut to the one-year loan prime rate and a 25-basis-point reduction in banks’ reserve requirement ratio.

For Malaysia, the world’s second-largest economy’s slower-than-expected growth trajectory poses both risks and potential opportunities. As China’s domestic demand remains subdued, Malaysian exporters—particularly in electronics, palm oil, and rubber—could face softer demand from its largest trading partner. However, any additional fiscal or monetary stimulus in China may help stabilize regional trade flows and support commodity prices, which are key Malaysian export categories.

The property sector’s persistent downturn in China continues to cast a shadow over global construction and raw material suppliers, including Malaysian firms involved in steel, cement, and glass exports. Meanwhile, weaker Chinese consumption could dampen tourism and education-related services in Malaysia, which have benefited from Chinese outbound travel and student flows in recent years.

Looking ahead, the effectiveness of China’s stimulus measures will be critical in determining whether the economy can avoid deeper deflationary pressures and rekindle sustainable growth. With policymakers balancing short-term support against long-term structural reforms, the global economic outlook remains contingent on Beijing’s ability to restore confidence in domestic demand and stabilize key sectors like real estate and manufacturing.

Related: Beijing