China’s economic outlook for 2024 and 2025 appears slightly brighter as the World Bank raised its growth forecast to 4.9% for 2024, reflecting the impact of policy easing and stronger exports. This upward revision of 0.1 percentage points from the previous projection underscores the resilience of the world’s second-largest economy, which grew 4.8% during the first three quarters of 2024.
Recent data points to a rebound in domestic demand, supported by government initiatives like the 150-billion-yuan consumer trade-in program, which boosted sales of household appliances, automobiles, and furniture. A similar equipment upgrade scheme aimed at manufacturing has driven investment growth, while infrastructure spending surged by 13% year-on-year between September and November.
Despite headwinds in the property sector and cautious consumer sentiment, China’s overall growth trajectory remains stable. The Asian Development Bank maintained its 2024 forecast at 4.8%, while Chinese officials project the economy to expand by around 5% - contributing nearly 30% to global growth. Policymakers are expected to set a similar growth target for 2025, supported by increased fiscal spending and counter-cyclical measures.
The World Bank projects China’s growth at 4.5% in 2025 (+0.4% compared to the previous forecast), citing persistent challenges like sluggish domestic demand, high debt levels in property and local governments, and demographic constraints. Structural reforms, such as improving local government finances and addressing social safety net gaps, are deemed essential for long-term stability.
Domestically, the property downturn and weak labor markets pose risks, while globally, trade uncertainties could pressure China’s export performance. However, higher-than-expected fiscal stimulus and decisive action on property stabilization may provide upside potential.