The World Bank has revised its forecast for China’s GDP growth, now predicting a 4.9% increase in 2024 and 4.5% in 2025. These figures represent slight upward adjustments from the previous projections of 4.8% for 2024 and 4.1% for 2025.
Meanwhile, the Chinese government has set a growth target of around 5% for 2025, consistent with the benchmark set for the prior year.
Bad News For China
The report says that the world’s second-largest economy is projected to face a slowdown in the coming year, driven by weak domestic demand and challenges in the property sector. Additionally, China’s growth is expected to be impacted by U.S. President-elect Donald Trump, who is anticipated to impose higher tariffs on Chinese goods after taking office in January.
The report also highlights economic mobility in China as a crucial tool to bridge the urban-provincial divide, reduce income inequality, and boost domestic consumption. While the share of the middle class has grown since the 2010s, reaching 32% of the population by 2021, the report notes that approximately 55% of the population remains economically vulnerable.
“Expanding opportunities for everyone to move up the economic ladder is important for achieving China’s goal of common prosperity,” Elitza Mileva, the World Bank’s lead economist for China, said. “Equal opportunities and greater social mobility will, in turn, support growth through higher human capital and greater entrepreneurship and risk-taking by economically secure households.”
World Bank’s Policy Measures Suggestions
The World Bank stressed on several key initiatives to address the ongoing property downturn, including providing liquidity support for property developers, reducing housing down payment requirements, and facilitating state purchases of surplus housing inventory.
“It is important to balance short-term support to growth with long-term structural reform. Addressing challenges in the property sector, strengthening social safety nets and improving local government finances will be essential to unlocking a sustained recovery,” Mara Warwick, the World Bank’s country director for China.
To boost economic growth, Chinese authorities have reportedly approved the issuance of a record US$411 billion in special treasury bonds for the upcoming year, according to Reuters.
The official announcement is expected during the annual meeting of China’s parliament, the National People’s Congress, in March, and the figures remain subject to revision until then.
