China's economic growth has shown signs of recovery in the third quarter of 2023, as the artificial intelligence (AI) boom significantly boosted exports. The world's second-largest economy recorded a growth rate of 4.5% from July to September, a slight increase from 4.3% in the previous quarter, although it remains below the 5% expansion seen from January to March.

Economic Context

This latest growth figure aligns with the lower end of Beijing's annual growth target of 4.5%-5%. Analysts suggest that this provides policymakers with some flexibility to tackle ongoing economic challenges. While exports have helped mitigate weak domestic spending, global trade tensions and uncertainties surrounding AI investments continue to cloud the economic outlook.

Export Growth and Trade Surplus

With exports on the rise, China's trade surplus is projected to surpass last year's record of $1.2 trillion (£900 billion). The technology sector has been a crucial contributor to this growth, driven by global demand for computer chips and components essential for AI data centers. This demand has alleviated some pressure on Beijing and cushioned the effects of sluggish domestic consumption.