Economic activity picked up in China in early 2024, buoyed by stronger exports. Meanwhile, growth in domestic demand moderated. Manufacturing and infrastructure investment and consumer spending on services remained robust, while the property market correction continued, the World Bank said in Growing Beyond Property: Cyclical Lifts and Structural Challenges, the latest China Economic Update released today.
GDP growth is projected at 4.8 percent in 2024, an upward revision of 0.3 percentage points from the December 2023 forecast. The revision reflects stronger-than-expected exports and the impact of policy measures to support the property market and higher fiscal spending.
Risks to the growth outlook are broadly balanced. On the upside, earlier stabilization in the property sector and higher-than-expected fiscal spending could lift growth above the current forecast. Substantial progress on structural reforms, including of the enabling environment for the private sector, could boost short-term confidence and long-run productivity growth. Downside risks include a delay in the property market recovery beyond 2024, persistent deflationary pressures, slower-than-expected global growth, and increased trade tensions.
“Structural reforms could help China both sustain growth momentum in the short term and pursue long-term objectives,” said Mara Warwick, World Bank Country Director for China, Mongolia, and Korea. “Policies to accelerate the transition to carbon neutrality could boost demand for green technologies, while debt resolution and exit of unviable firms in the property and other sectors would reduce imbalances and free resources that can be used by more productive businesses.”
The report also explores the impact of an aging population on growth and inequality in China. China’s rapidly aging population will have wide-ranging economic impacts, but with the right policies the demographic transition is manageable. “The economic challenges from an aging population can be overcome with policies that increase labor force participation and extend productive working lives.,” said Elitza Mileva, World Bank Lead Economist for China. “Affordable childcare, better work-life balance, elimination of gender bias in hiring, a higher retirement age, skills upgrading, and lifelong learning are measures that could expand China’s workforce and make it more productive.”
