The World Bank yesterday raised its forecast for China’s economic growth this year and next, but warned that subdued household and business confidence, along with headwinds in the property sector, would keep weighing it down next year.
The world’s second-biggest economy has struggled this year, mainly due to a property crisis and tepid domestic demand.
An expected hike in US tariffs on its goods when US president-elect Donald Trump takes office next month might also hit growth.
Photo: Reuters
“Addressing challenges in the property sector, strengthening social safety nets, and improving local government finances will be essential to unlocking a sustained recovery,” World Bank country director for China Mara Warwick said in a statement. “It is important to balance short-term support to growth with long-term structural reforms.”
Thanks to the effect of policy easing and near-term export strength, the World Bank sees China’s GDP growth at 4.9 percent this year, up from its June forecast of 4.8 percent.
Beijing set a growth target of about 5 percent this year, a goal that it says it is confident of achieving.
Although growth for next year is also expected to fall to 4.5 percent, that is still higher than the World Bank’s earlier forecast of 4.1 percent.
Slower household income growth and the negative wealth effect from lower house prices are expected to weigh on consumption into next year, the World Bank said, adding that a turnaround in the property sector is not anticipated until late next year.
To revive growth, Chinese authorities have agreed to issue a record 3 trillion yuan (US$411 billion) in special treasury bonds next year, Reuters reported this week.
The figures are not being officially unveiled until the annual meeting of China’s parliament, the National People’s Congress, in March, and could still change before then.
China’s middle class has expanded significantly since the 2010s, encompassing 32 percent of the population in 2021, but World Bank estimates suggest that about 55 percent remain “economically insecure,” underscoring the need to generate opportunities.
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