China: Growth rebound supports 2026 outlook – Standard Chartered

Standard Chartered economist Hunter Chan notes that China’s Q3 GDP rose 1.2% q/q and 4.5% y/y, helped by robust exports and AI-related industrial demand, while household consumption stayed soft. The bank keeps its Q4 and full-year 2026 GDP growth forecasts at 4.7% and 4.6%. It also cuts its 2026 CPI forecast to 0.9% but expects higher PPI inflation.

Q3 strength underpins medium-term growth

"Q3 GDP growth came in at a stronger-than-expected 4.5% y/y; seasonally adjusted growth recovered to 1.2% q/q (from 0.9% in Q2). Robust exports and AI-related demand continued to support industrial production (IP) growth."

"Fixed-asset investment (FAI) ended six straight months of m/m declines, thanks to improved manufacturing and infrastructure investment. Meanwhile, household demand appeared to have stayed soft, as household consumption spending growth lagged disposable income growth."

"We maintain our Q4 and full-year 2026 GDP growth forecasts at 4.7% y/y and 4.6%, respectively. Recent policy measures, including the first-home interest subsidy programme and the allocation of accumulated unused local government debt quotas, should help mitigate downside risks to growth, in our view."

"That said, we believe budget implementation through faster fiscal disbursement for infrastructure projects and the clearance of hidden local government debt and arrears remain key to supporting growth."

"We lower our 2026 CPI inflation forecast to 0.9%, reflecting softer-than-expected energy price transmission and persistent food price deflation. By contrast, the pass-through of elevated global oil and metal prices, alongside higher prices of AI-related inputs and products, could push PPI inflation above 3% this year."

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