Reuters and staff reporter
The World Bank raised its forecast about China's economic growth to 4.9 percent this year and 4.5 percent next year on the recent easing measures, but it warned that domestic consumption would further weaken next year.
"Addressing challenges in the property sector, strengthening social safety nets, and improving local government finances will be essential to unlocking a sustained recovery," Mara Warwick, the World Bank's country director for China, said.
"It is important to balance short-term support to growth with long-term structural reforms," she added in a statement.
Thanks to the effect of recent policy easing and near-term export strength, the World Bank raised China's gross domestic product growth this year by 0.1 percentage points up from its June forecast of 4.8 percent. Although growth for 2025 is also expected to fall to 4.5 percent, that is still higher than the World Bank's earlier forecast of 4.1 percent.
Beijing set a growth target of "around 5 percent" this year, a goal it says it is confident of achieving.
Yesterday, China revised upwards its 2023 GDP by 2.7 percent to 129.4 trillion yuan (HK$137.7 trillion). However, the National Bureau of Statistics said the revision of 2023 GDP would not have a significant impact on China's 2024 GDP growth rate.
Slower household income growth and the negative wealth effect from lower home prices are expected to weigh on consumption into 2025, the Bank added.
The spending is already losing momentum in some sectors. China's box office revenues for Christmas Eve plummeted to 38.4 million yuan, the lowest in at least 13 years, according to data from the ticket booking platform Maoyan (1896).
To revive growth, Chinese authorities were reported to have agreed to issue a record 3 trillion yuan in special treasury bonds next year.
The figures will not be officially unveiled until the annual meeting of China's parliament, the National People's Congress, in March 2025, and could still change before then.
While the housing regulator will continue efforts to stem further declines in China's real estate market next year, the World Bank said a turnaround in the sector was not anticipated until late 2025.
On Wednesday, China's State Council added more industries into the investment scope of special treasury bonds, including digitalization and low-altitude economy. It also allowed the local governments to use as much as 30 percent of special treasury bonds as the capital of the eligible projects, up from 25 percent previously.
Consumption faces headwinds in 2025. BLOOMBERG
