BEIJING, December 26, 2024 — Despite multiple challenges, China’s economic growth has remained robust at 4.8 percent in the first three quarters of the year. But growth has moderated since the second quarter of 2024, weighed down by subdued domestic demand and a prolonged downturn in the property sector. The government has provided policy stimulus aimed at balancing short-term support for domestic demand with longer-term financial stability objectives. To complement these stimulus measures, the latest China Economic Update “Reviving Demand, Regaining Momentum” suggests structural reforms to revitalize growth.
According to the Update released today, China’s growth is estimated at 4.9 percent in 2024 and projected at 4.5 percent in 2025. While recent policy easing measures are expected to provide moderate support, subdued household and business confidence, along with headwinds in the property sector will continue weighing on growth in 2025. Structural constraints to growth include low consumption, high debt levels among property developers and local governments, and an ageing population.
“It is important to balance short-term support to growth with long-term structural reforms,” said Mara Warwick, World Bank Country Director for China, Mongolia, and Korea. “Addressing challenges in the property sector, strengthening social safety nets, and improving local government finances will be essential to unlocking a sustained recovery. Clear communication of specific policy measures will be crucial to strengthening the confidence of markets and households.”
China’s economy faces both domestic and external risks. Domestically, a more persistent downturn in the property sector could further weaken investment and local government revenues. Additionally, further weakening of labor market conditions due to lower enterprise profitability and reduced hiring could reduce consumption. Globally, heightened uncertainties around trade pose risks to China’s exports. On the upside, higher-than expected fiscal spending and more decisive policy actions to stabilize the property sector, following recent guidance from policymakers, could lift the growth forecast above the current baseline projection.
The Update also explores economic mobility. Enhancing economic mobility is particularly important in China, as it can help bridge rural-urban divides, reduce income inequality, and unlock greater domestic consumption—a key pillar for rebalancing the economy toward more sustainable, domestic demand-driven growth. While the size of China’s middle class has expanded significantly since the 2010s, reaching 32 percent of the population in 2021, World Bank estimates suggest that approximately 55 percent of the population remains economically insecure, underscoring the need to address disparities in opportunity.
“Expanding opportunities for everyone to move up the economic ladder is important for achieving China’s goal of common prosperity,” said Elitza Mileva, World Bank Lead Economist for China. “Equal opportunities and greater social mobility will, in turn, support growth through higher human capital and greater entrepreneurship and risk taking by economically secure households.”
