China's economy has shown resilience with a growth rate of 4.8 percent in the first three quarters of 2024, according to a World Bank report released on December 26, 2024. However, growth has slowed since the second quarter due to weak domestic demand and ongoing issues in the property sector. The government has implemented policy measures to support domestic demand while maintaining financial stability.
The World Bank's China Economic Update titled "Reviving Demand, Regaining Momentum" projects China's growth at 4.9 percent for 2024 and 4.5 percent for 2025. Despite recent policy easing, challenges such as low consumer confidence and problems in the property sector are expected to continue affecting growth next year. Other structural constraints include low consumption levels, high debt among property developers and local governments, and an aging population.
Mara Warwick, World Bank Country Director for China, Mongolia, and Korea stated, “It is important to balance short-term support to growth with long-term structural reforms.” She emphasized addressing issues in the property sector and improving local government finances as crucial steps for recovery.
China faces both domestic and international risks. Domestically, a prolonged downturn in the property market could further impact investment and government revenues. Additionally, weaker labor market conditions might reduce consumption levels. Globally, uncertainties surrounding trade could affect China's exports. However, increased fiscal spending and decisive actions in stabilizing the property sector may improve growth forecasts beyond current projections.
The report also highlights economic mobility as a significant factor for sustainable growth driven by domestic demand. Enhancing economic mobility can help bridge rural-urban divides and reduce income inequality in China. Although China's middle class has grown significantly since the 2010s—reaching 32 percent of the population by 2021—around 55 percent remain economically insecure.
Elitza Mileva, World Bank Lead Economist for China remarked that “Expanding opportunities for everyone to move up the economic ladder is important for achieving China’s goal of common prosperity.” She added that equal opportunities would support growth through increased human capital and entrepreneurship among economically secure households.