World Bank lifts China growth forecasts but calls for deeper reforms

The World Bank has lifted its growth forecasts for China’s economy, but called for deeper reforms and warned that the country will continue to face headwinds from a lingering property downturn.

The Washington-based institution said that it expected China’s gross domestic product (GDP) to rise by 4.9% in 2024 as a result of recent policy easing and stronger exports. That is up from June forecasts of 4.8% and is just shy of Beijing’s own 5% growth target.

The world’s second-biggest economy has struggled this year, as it continues to feel the effects of a multiyear property crisis and weak domestic demand. Beijing has tried to pivot the country to more hi-tech industries to boost GDP, but there are growing fears that a rise in US tariffs when Donald Trump returns to the White House in January could further knock growth.

The World Bank said that subdued confidence among households and businesses would continue to weigh on China’s growth in 2025. That was on top of structural problems, including low consumption and high debt levels among property developers and local governments, as well as an ageing population.

It said a turnaround in the China property market was not expected until late 2025. The World Bank forecasts growth in China will slow to 4.5% for 2025. However, that is still higher than earlier forecasts of 4.1%.

The multilateral bank reiterated its calls for deeper reforms in the Chinese economy, explaining that “conventional stimulus measures will not be sufficient to reinvigorate growth.”

“It is important to balance short-term support to growth with long-term structural reform,” Mara Warwick, the World Bank country director for China, said. “Addressing challenges in the property sector, strengthening social safety nets and improving local government finances will be essential to unlocking a sustained recovery.”

The report argued that as well as trying to boost productivity of workers, Chinese authorities should focus on boosting access to quality education, healthcare and social welfare.

It said those measures “could help allay economic anxieties, particularly of those in the low-income and vulnerable middle class. Stronger safety nets can also have efficiency benefits when greater risk taking by economically secure households drives enterprise and entrepreneurship.”

While China’s middle class has boomed since the 2010s, making up 32% of the population in 2021, the World Bank estimates that about 55% remain “economically insecure”, underscoring the need to generate opportunities across the country.

“Expanding opportunities for everyone to move up the economic ladder is important for achieving China’s goal of common prosperity,” Elitza Mileva, the World Bank’s lead economist for China, said. “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.”