China’s economy slows to 4.8% annual growth in July-September, hit by tariffs and weak demand.

HONG KONG (AP) — China’s economy saw its slowest annual growth in a year between July and September, growing 4.8%, weighed down by trade tensions with the United States and weak domestic demand.

The July-September data is the weakest pace of growth since the third quarter of 2024, and compares with a growth pace of 5.2% in the previous quarter, the government said in a report on Monday.

Between January and September, the world’s second-largest economy grew by 5.2% annually. Despite higher tariffs imposed by US President Donald Trump on imports from China, that country’s exports have remained relatively strong, with companies increasing sales to other global markets.

China’s exports to the United States fell 27% in September from a year earlier, even as its global export growth hit its highest level in six months, climbing 8.3%.

Exports of electric vehicles doubled in September from a year earlier, while domestic sales of passenger cars climbed 11.2% year-on-year last month, compared with a 15% rise in August, according to data released last week.

Tensions between Beijing and Washington remain high and it is unclear whether Trump and Chinese leader Xi Jinping will move forward with a proposed meeting at a regional summit later this month.

Xi and other members of the ruling Communist Party are holding one of China’s most important political meetings of the year on Monday, where they will set the country’s economic and social policy goals for the next five years.

The economy slowed last quarter as authorities took steps to end a fierce price war in sectors such as the auto industry due to excess capacity.

China also faces challenges, including a prolonged slowdown in the real estate sector that has affected consumption and demand.

Data released on Monday showed that sales of residential properties in China fell 7.6% in value between January and September compared to the previous year. Industrial production rose 6.5% year-on-year last month, the fastest pace since June, but retail sales growth slowed to 3% from a year earlier.

Ratings agency S&P estimates that national new home sales will fall 8% in 2025 from the previous year and 6% to 7% in 2026.

The World Bank expects China’s economy to grow 4.8% annually this year. The government’s official growth target is around 5%.

Chinese stocks rose on Monday, with Hong Kong’s Hang Seng climbing 2.3% and the Shanghai Composite index rising 0.5%.

A spokesperson for the National Bureau of Statistics said China had a “solid foundation” to achieve its full-year growth target, but cited external complications – including trade frictions with the United States and other trading partners and protectionist policies of many countries – as reasons for the slowdown.

China’s stronger economic growth in the first half of this year gives it “some buffer” to meet its growth target, said Lynn Song, chief economist for Greater China at ING Bank.

However, spending during the eight-day Golden Week, China’s national holiday in October, was “slightly disappointing,” reflecting weak consumer confidence and demand, Morningstar analysts said in a note this month.

Investment in factories, equipment and other “fixed assets” fell 0.5% last quarter, underscoring weak domestic demand. This was also reflected in prices, which continued to fall at both the consumer and wholesale level.

The government has the opportunity to do more, Song said.

“(We) are looking to see if there will be new measures to support consumption and the real estate market, as the impact of previous policies begins to weaken,” Song said.

Economists also expect China’s central bank to cut rates by the end of the year, which could encourage more spending and investment.

China’s economy is also expected to slow further in 2026, said Jacqueline Rong, chief China economist at BNP Paribas, as real estate investment in the country “looks (likely) to continue to decline” and the AI ​​boom, which has helped revive China’s economy and fuel a stock market rally, is expected to moderate.