Despite raising its growth forecast for China in 2024 and 2025, the World Bank warned that weak household and business confidence, along with challenges in the property sector, will continue to hinder the nation’s economy.
China has faced difficulties this year due to a property crisis, weak domestic demand, and the looming tariffs expected after Donald Trump assumes office in January 2025.
Mara Warwick, the World Bank’s Country Director for China, emphasized that China will not achieve a sustained economic recovery without addressing the ongoing property crisis, strengthening social safety nets, and improving local government finances. She also highlighted the importance of balancing short-term support measures with long-term structural reforms.
The World Bank forecast that recent policy easing and strong near-term exports will push China’s GDP to 4.9%, surpassing previous forecast of 4.8%. Still, it is below Beijing’s target growth for 5% in 2024. Growth in 2025 is expected to slow to 4.5%, which is higher than a 4.1% expansion forecast by the World Bank earlier.
In addition to low growth expectations, the World Bank also forecasts that 2025 consumption will be impacted by slower household income growth and the negative wealth effect from lower home prices.
According to Reuters, China plans to boost its economic growth by issuing a record 3 trillion yuan ($411 billion) in special treasury bonds in 2025. However, the final figures will not be confirmed until the annual meeting of China’s parliament in March 2025.
The World Bank stated that despite the housing regulator’s efforts to stem further declines in China’s real estate market, a turnaround is not expected until late 2025. This is partly due to the “economically insecure” status of 55% of China’s middle class, highlighting the need to generate more opportunities.
