FILE PHOTO: A general view of residential buildings in Beijing, China September 6, 2023. REUTERS/Tingshu Wang/File Photo
China’s Economic Growth Forecast Unchanged for 2023, Slightly Lowered for 2024, says World Bank
BEIJING – The World Bank has maintained its forecast for China’s 2023 economic growth at 5.1 percent, aligning with its previous estimate in April, but has slightly reduced its prediction for 2024 to 4.4 percent from 4.8 percent. This adjustment is due to the continued weakness observed in China’s property sector, as reported in the bank’s semi-annual regional update released on Sunday.
The World Bank has also revised its 2023 gross domestic product (GDP) growth forecast for East Asia and the Pacific region, including China, to 5 percent, slightly lower than the previous estimate of 5.1 percent. For 2024, the regional outlook has been lowered to 4.5 percent growth from 4.8 percent, primarily influenced by external factors such as a sluggish global economy, high interest rates, and trade protectionism. The World Bank emphasized that global trade has experienced a significant increase in restrictions, with around 3,000 new restrictions imposed in 2022, tripling the number imposed in 2019.
The World Bank’s report highlights that China’s economic recovery from the extensive measures taken to combat COVID-19 has weakened, and the country continues to face challenges from elevated debt levels and the persistent weakness in its property sector. Despite the recent stabilization shown in China’s factory activity and other economic indicators, more policy support will be necessary to achieve the government’s growth target of about 5 percent for this year.
Structural Reforms and Reviving Sustainable Growth
The World Bank suggests that implementing stronger structural reforms, such as further liberalization of the “hukou” residence permit system, strengthening social safety nets, and providing greater regulatory predictability for investments in innovative and green products, could help revive consumption and investment. These reforms would create the foundation for sustainable growth in China.
The polarized government advisers in China are debating the best way forward to address the economic sluggishness, with the pro-reform camp advocating for faster structural reforms. This includes relaxing the hukou system to stimulate consumption and removing market entry barriers for private firms, even at the potential expense of state-owned giants.
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