World Bank's Optimistic Forecast for China's Economy Amid Challenges

The World Bank has adjusted its growth forecasts for China's economy, predicting modest increases despite ongoing challenges in the property sector and subdued business confidence. Short-term growth supports and structural reforms are deemed crucial for sustained recovery. Special treasury bonds are expected to help revive growth amid domestic demand issues.

The World Bank has raised its forecast for China's economic growth in 2024 and 2025, while cautioning that low household and business confidence, along with challenges in the property sector, will continue to hinder progress next year.

China's economy, the second largest in the world, has faced difficulties this year, primarily due to issues within the property sector and muted domestic demand. An anticipated increase in U.S. tariffs on Chinese goods could further impact growth. "To unlock a sustained recovery, addressing challenges in the property sector, bolstering social safety nets, and improving local government finances are essential," said Mara Warwick, the World Bank's country director for China.

In a statement, Warwick emphasized balancing short-term growth support with long-term structural reforms. The World Bank now forecasts China's GDP growth at 4.9% this year, up from a previous estimate of 4.8%. Beijing aims for a growth rate of around 5% and expresses confidence in achieving this target for 2025, despite expectations of slower growth at 4.5%. To boost growth, Chinese authorities plan to issue a record 3 trillion yuan in special treasury bonds next year, with official figures to be announced at China's National People's Congress in March 2025.

(With inputs from agencies.)