China’s economic growth to slow in ’25 – World Bank

China’s economic growth is projected to reach 4.9 per cent in 2024, with a further moderation to 4.5 per cent in 2025, according to the World Bank’s China Economic Update.

Despite these forecasts, the economy grew by 4.8 per cent in the first three quarters of 2024, although growth has slowed since the second quarter, largely due to weak domestic demand and a prolonged downturn in the property sector.

The World Bank’s report outlines that the government’s policy stimulus measures aim to balance short-term support for domestic demand with longer-term financial stability objectives. However, the report also stresses the need for structural reforms to revitalise growth, particularly in the property sector, through strengthening social safety nets and improving local government finances.

The report also identifies key constraints to growth, including low consumption, high debt levels among property developers and local governments, and an ageing population. Domestically, further weakness in the property sector could undermine investment and local government revenues, while declining labour market conditions may dampen consumption. Globally, trade uncertainties also pose risks to China’s exports.

On the positive side, higher-than-expected fiscal spending and more decisive policy actions to stabilise the property sector could lift growth beyond the current baseline projection.

The update also examines the issue of economic mobility, stressing that improving mobility is crucial for addressing rural-urban divides and reducing income inequality. While the middle class in China has expanded significantly since the 2010s, reaching 32 per cent of the population in 2021, World Bank estimates show that approximately 55 per cent of the population remains economically insecure. This highlights the need to address disparities in opportunity and provide more inclusive economic mobility.

Attribution: Amwal Al Ghad English

Subediting: M. S. Salama