China’s Latest GDP QoQ Growth: 1.10% Surpasses Expectations Amid Mixed Signals
China’s real GDP grew 1.10% quarter-on-quarter in Q3 2025, beating the 0.80% consensus and matching Q2’s pace. This steady expansion reflects resilient domestic demand despite global headwinds. Monetary easing and fiscal stimulus continue to support growth, but geopolitical tensions and export softness pose risks. Forward-looking indicators suggest moderate momentum with upside potential if reforms deepen and external conditions improve.
Table of Contents
The latest Gross Domestic Product (GDP) quarter-on-quarter (QoQ) reading for China, released on October 20, 2025, shows a 1.10% increase in real GDP. This figure surpasses the market estimate of 0.80% and matches the previous quarter’s 1.10% growth, signaling sustained economic momentum. The data, sourced from the Sigmanomics database, covers the third quarter of 2025 and provides critical insight into China’s economic trajectory amid a complex global environment.
Drivers this month
- Domestic consumption contributed approximately 0.60 percentage points (pp) to GDP growth, buoyed by retail sales and services.
- Industrial production added 0.30 pp, reflecting steady factory output despite export headwinds.
- Fixed asset investment contributed 0.20 pp, supported by infrastructure projects and technology upgrades.
Policy pulse
The 1.10% growth rate remains above the People’s Bank of China’s (PBOC) inflation target of around 2%, indicating room for continued accommodative monetary policy. The central bank has maintained a cautious easing stance, with recent cuts in the reserve requirement ratio and targeted lending facilities supporting credit growth.
Market lens
Following the GDP release, the Chinese yuan (CNYUSD) strengthened modestly by 0.30%, while 2-year government bond yields edged down by 5 basis points, reflecting investor confidence in sustained growth. Equity markets responded positively, with the 000001.SZ Shenzhen Composite Index rising 0.70% in early trading.
China’s GDP growth of 1.10% QoQ in Q3 2025 compares favorably with the 1.00% recorded in Q1 2025 and 1.20% in Q2 2025, indicating a stable expansion phase. The 12-month average quarterly growth stands at 1.13%, underscoring consistent performance despite external uncertainties.
Monetary Policy & Financial Conditions
The PBOC’s accommodative stance has kept borrowing costs low, with the 1-year Loan Prime Rate steady at 3.45%. Credit growth accelerated to 12.50% YoY in September, supporting consumption and investment. Liquidity injections and targeted support for small and medium enterprises have helped maintain financial stability.
Fiscal Policy & Government Budget
Fiscal stimulus remains a key pillar, with the government increasing infrastructure spending by 8% YoY in Q3. The budget deficit target of 3.20% of GDP allows room for continued stimulus without jeopardizing fiscal sustainability. Tax relief measures and subsidies for green energy projects also bolster medium-term growth prospects.
External Shocks & Geopolitical Risks
Export growth slowed to 2.10% YoY in Q3, pressured by weaker demand from Europe and the US amid ongoing trade tensions. Geopolitical risks, including regional disputes and supply chain disruptions, continue to cloud the outlook. However, diversification efforts and new trade agreements mitigate some downside risks.
Drivers this month
- Retail sales growth accelerated to 5.40% YoY, supporting domestic demand.
- Industrial production rose 4.10% YoY, driven by manufacturing and energy sectors.
- Fixed asset investment increased 6.20% YoY, led by infrastructure and tech upgrades.
This chart highlights China’s economic resilience, with GDP growth holding steady despite external pressures. The balanced contributions from consumption, industry, and investment suggest a diversified growth model that can weather moderate shocks.
Market lens
Immediate reaction: CNYUSD strengthened 0.30%, while 2-year yields fell 5 bps. This reflects market optimism about China’s growth prospects and the central bank’s supportive stance. The CNYUSD pair’s appreciation underscores confidence in the yuan amid global currency volatility.
Looking ahead, China’s GDP growth faces a mix of supportive and challenging factors. The baseline scenario projects 1.00% QoQ growth in Q4 2025, with a 60% probability, assuming continued policy support and stable global demand. A bullish scenario (25% probability) envisions 1.30% growth driven by accelerated domestic consumption and successful export diversification. Conversely, a bearish scenario (15% probability) anticipates a slowdown to 0.70% growth due to intensified geopolitical tensions and weaker external demand.
Structural & Long-Run Trends
China’s economic transition toward consumption-led growth and high-tech industries remains on track. Long-run trends include rising urbanization, digital economy expansion, and green energy investments. These factors should underpin sustainable growth beyond cyclical fluctuations.
Policy pulse
The government is expected to maintain fiscal stimulus and monetary easing through early 2026, focusing on innovation, infrastructure, and social welfare. The PBOC’s cautious approach balances growth support with financial risk containment.
Market lens
Forward-looking indicators such as the Purchasing Managers’ Index (PMI) and credit impulse suggest moderate momentum. The SHCOMP Shanghai Composite Index’s recent gains reflect investor optimism about policy continuity and growth stability.
China’s Q3 2025 GDP growth of 1.10% QoQ confirms steady economic expansion amid a challenging global backdrop. The data from the Sigmanomics database highlights balanced contributions from consumption, industry, and investment. Policy support remains robust, but external risks and geopolitical uncertainties require vigilance. The outlook is cautiously optimistic, with upside potential if reforms deepen and global conditions improve.
Key risks include export softness, supply chain disruptions, and potential tightening of financial conditions abroad. However, China’s structural reforms and fiscal flexibility provide buffers. Investors should monitor policy signals, external demand trends, and domestic consumption patterns closely.
Overall, China’s economy appears well-positioned to sustain moderate growth in the near term, supporting global economic stability and commodity demand.
Key Markets Likely to React to Gross Domestic Product QoQ
China’s GDP growth data significantly influences regional and global markets. Equity indices, currency pairs, and bond yields closely track these releases, reflecting shifts in growth expectations and policy outlooks. The following symbols historically correlate with China’s GDP movements and are likely to react to this report:
- 000001.SZ – Shenzhen Composite Index, sensitive to domestic economic conditions and policy shifts.
- SHCOMP – Shanghai Composite Index, a barometer of China’s overall economic health.
- CNYUSD – Chinese yuan vs. US dollar, reacts to growth and monetary policy signals.
- BTCUSD – Bitcoin, often influenced by risk sentiment tied to major economies like China.
- USDCNH – Offshore yuan, reflects international investor sentiment on China’s economy.
Indicator vs. SHCOMP Since 2020
Since 2020, China’s quarterly GDP growth and the Shanghai Composite Index have shown a positive correlation, with GDP expansions often coinciding with equity rallies. Notably, during Q2 2023 and Q1 2024, GDP accelerations above 1.20% QoQ aligned with SHCOMP gains exceeding 5% quarterly. This relationship underscores the index’s sensitivity to economic fundamentals and policy shifts.
Frequently Asked Questions
- What does China’s latest GDP QoQ figure indicate?
- The 1.10% QoQ growth in Q3 2025 signals steady economic expansion, surpassing expectations and reflecting resilient domestic demand amid global uncertainties.
- How does this GDP reading affect China’s monetary policy?
- The growth rate supports continued accommodative monetary policy by the PBOC, balancing inflation control with growth support.
- What are the main risks to China’s GDP outlook?
- Key risks include export weakness, geopolitical tensions, and potential tightening of global financial conditions, which could slow growth.
Takeaway
China’s 1.10% QoQ GDP growth in Q3 2025 confirms steady expansion supported by balanced domestic demand and policy stimulus, but external risks warrant cautious optimism.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The 1.10% GDP QoQ growth in Q3 2025 is steady compared to the 1.10% in Q2 and above the 0.80% estimate, while exceeding the 12-month average of 1.13%. This stability suggests resilience in China’s economic engine despite global headwinds.
Industrial output and consumption remain the primary growth engines, with fixed asset investment providing a steady base. The data aligns with recent trends in retail sales growth of 5.40% YoY and industrial production up 4.10% YoY.