China's Economic Growth Forecast Revised Down to 4.5% in 2025

The World Bank has projected China's economic growth to slow to 4.5% in 2025, down from the previously forecast 4.9% growth in 2024, citing subdued domestic demand, a downturn in the property sector, and structural constraints. Despite policy stimulus measures, the growth is expected to be weighed down by household and business confidence, property sector headwinds, and structural issues such as low consumption, high debt levels, and an aging population.

The World Bank emphasizes the need for structural reforms to revitalize growth, including addressing challenges in the property sector, strengthening social safety nets, and improving local government finances. The report highlights the importance of enhancing economic mobility to bridge rural-urban divides, reduce income inequality, and unlock greater domestic consumption. Approximately 55% of China's population remains economically insecure, underscoring the need to expand opportunities for economic mobility.

Meanwhile, China's economic growth forecast was revised upward to 4.9% in 2024 due to policy-driven improvement in domestic demand, driven by recent policy easing, near-term export strength, and rebounding retail sales in the household appliances and automobiles sector. The Asian Development Bank maintained its growth forecast for 2024 at 4.8%, while the government is on track to meet its full-year growth target, contributing nearly 30% to global growth.

As the Chinese economy continues on the road to recovery, policymakers are expected to set a GDP growth target of around 5% for 2025, with a deficit-to-GDP ratio of 3.8%. A stronger macroeconomic policy is anticipated in 2025 to boost household income and consumption capacity, amidst moderate economic growth projections. Despite challenges such as an ailing property sector and high debt levels, experts are cautiously optimistic about China's economic prospects in 2025, with the economy finally turning the corner after a slowdown.