World Bank raises forecast for China - Despite 4.9% growth, the economy faces major challenges
The World Bank raised its forecast for China's economic growth in 2024 and 2025, but warned that subdued household and business confidence will continue to weigh on the country next year.
The world's second-largest economy has suffered this year, largely due to the property crisis and weak domestic demand. An expected increase in US tariffs on goods when US President-elect Donald Trump takes office in January could also hit growth.
Addressing challenges in the property sector, strengthening social security and improving local government finances will be key to unlocking a sustainable recovery, according to the World Bank.
Thanks to the effect of recent policy easing and near-term export strength, the World Bank sees China's Gross Domestic Product growing at 4.9% this year, up from a June forecast of 4.8%.
Beijing has set a growth target of "around 5%" this year, which it is confident it will achieve. Although growth for 2025 is also expected to fall to 4.5%, it is still higher than the World Bank's previous forecast of 4.1%.
To turn things around, Chinese authorities have agreed to issue a record $411 billion in special treasury bonds next year. The figures will not be officially revealed until the annual meeting of the National People's Congress in March 2025, and may change before then.
While the housing regulator will continue efforts to stem further declines in China's real estate market next year, the World Bank said a turnaround in the sector was not expected until late 2025.
China's middle class has expanded significantly since the 2010s, comprising 32% of the population in 2021, but World Bank estimates suggest that around 55% remain "economically insecure", underscoring the need to create new opportunities.
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