China’s economic expansion experienced a slowdown in the third quarter, coinciding with increased trade friction with the United States. Official figures released on Monday indicate that the world’s second-largest economy grew by 4.8% compared to the same period last year, marking its weakest performance in a year. This cooling growth trend follows China’s recent implementation of stringent controls on rare earth exports, a move that significantly impacted its tentative trade truce with the US.
The Q3 GDP growth data is particularly significant as it sets the stage for an upcoming assembly of China’s top leaders, who are expected to deliberate on the nation’s economic strategy for the 2026-2030 period. The current economic climate presents a challenging backdrop for these crucial policy discussions.
While China has maintained its annual economic growth target of ‘around 5%’ and has so far managed to avoid a severe downturn, bolstered by supportive government measures, the ongoing trade disputes pose a notable challenge. The imposition of rare earth export controls by China has drawn a strong reaction from the US, with President Donald Trump retaliating by considering additional tariffs on Chinese imports. US Treasury Secretary Scott Bessent is scheduled to meet with Chinese officials to de-escalate tensions and explore the possibility of a summit between President Trump and President Xi Jinping.
Prior to this recent escalation, Chinese businesses had benefited from a temporary trade truce, leading to an 8.4% increase in China’s exports in September. The country’s industrial output also showed resilience, growing by 6.5% year-on-year, with key sectors such as 3D printing, robotics, and electric vehicles demonstrating strong performance. The services sector, encompassing IT support, consultancies, and logistics, also contributed positively to the economic activity.
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