Trump tariffs bite China’s economy; growth slows to 4.8% in Q3

New Delhi: China’s economy expanded 4.8 per cent in July-September, its slowest annual pace in a year, as higher US tariffs and weak domestic demand weighed on activity.

The July-September print was the weakest since Q3 2024 and compares with 5.2 per cent in the April-June quarter, according to official data released on Monday. For January-September, growth averaged 5.2 per cent on an annual basis.

Despite US President Donald Trump’s higher tariffs on Chinese imports, exports have held up better than feared as firms redirected sales to other markets. Even so, trade tensions remain elevated and it is unclear if Trump and President Xi Jinping will meet during a regional summit later this month.

The slowdown also reflected domestic factors. Authorities moved to curb fierce price wars in sectors such as autos, a symptom of overcapacity. The prolonged property downturn continued to drag on consumption and investment. 

S&P Global Ratings estimates nationwide new home sales could fall 8 per cent in 2025 and a further 6-7 per cent in 2026.

The World Bank expects China to grow 4.8 per cent this year. Beijing’s official target is “around 5 per cent.” Stronger growth in the first half offers “some buffer” to meet that goal, said Lynn Song, chief economist for Greater China at ING.

Holiday spending during the eight-day Golden Week in October was “mildly disappointing,” Morningstar noted, underscoring fragile consumer confidence. 

Analysts expect Beijing to roll out additional measures to support consumption and stabilise housing as earlier policies lose traction.

Economists also see room for a rate cut by the People’s Bank of China before year-end to spur credit, spending and investment.

Separately, Xi and senior Communist Party leaders began a key policy meeting on Monday to map economic and social priorities for the next five years. 

Markets will watch for signals on property, local debt clean-up, advanced manufacturing and external resilience as China navigates higher US tariffs and a slower global cycle.