World Bank Upgrades China’s Economic Growth Forecast, Calls for Structural Reforms Amid Ongoing Property Crisis

 

The World Bank has raised its economic growth forecast for China in 2024, now projecting a 4.9% increase in the country’s GDP. This marks a slight improvement from the previous forecast of 4.8% in June, driven by policy easing and stronger export performance. The revised forecast is close to China’s own growth target of 5%, though the country continues to face significant economic challenges.

Despite the upgrade, the World Bank cautioned that China’s recovery remains fragile, with lingering headwinds from a prolonged property downturn and weak domestic demand. The property crisis, which has plagued the nation for several years, continues to dampen growth prospects, with confidence among households and businesses remaining subdued. The transition to high-tech industries, which Beijing has pushed to stimulate economic activity, has not been enough to counterbalance these pressures.

Looking ahead, the World Bank forecasts a slowdown in growth to 4.5% in 2025, though this is a slight improvement from its previous projection of 4.1%. The institution stressed the need for deeper structural reforms to address the underlying challenges in the Chinese economy, noting that traditional stimulus measures are insufficient to revive long-term growth.

Mara Warwick, the World Bank’s country director for China, emphasized the importance of balancing short-term economic support with long-term reforms. She highlighted the need to address issues within the property sector, strengthen social safety nets, and improve the financial stability of local governments. These measures, she argued, are essential for sustaining recovery.

In addition to boosting productivity, the World Bank recommends expanding access to quality education, healthcare, and social welfare as key strategies to improve economic security, particularly for low-income and vulnerable middle-class households. This approach, the World Bank stated, would not only alleviate economic anxiety but also foster greater risk-taking and entrepreneurship.

While China’s middle class has grown rapidly in recent years, the World Bank’s report highlighted that about 55% of Chinese citizens remain economically insecure, underscoring the importance of creating opportunities for broader social mobility. Elitza Mileva, the World Bank’s lead economist for China, noted that expanding opportunities and ensuring equal access to economic advancement are critical to achieving the country’s goal of common prosperity. These efforts, she argued, would lead to higher human capital and a more dynamic, entrepreneurial economy.