World Bank revises up China's growth projection

High-rises dominate the skyline on both sides of the Huangpu River in Shanghai. (Photo by Gao Erqiang/China Daily)

The World Bank has revised up China's real GDP growth for this year and next to 4.9 percent and 4.5 percent, respectively, while underlining the necessity of ramping up structural reforms alongside stimulus measures to reinvigorate growth.

In its latest China Economic Update released on Thursday, the World Bank said the projections were revised up by 0.1 and 0.4 percentage points, respectively, compared to the June publication.

The revisions accounted for the effect of recent policy easing and near-term export strength, the bank said, with recent policy stimulus "balancing short-term growth support with longer term derisking objectives".

While recent policy easing measures are expected to provide moderate support, the bank warned that subdued household and business confidence, along with headwinds in the property sector will continue to weigh on growth in 2025.

Structural constraints to growth include low consumption, high debt levels among property developers and local governments and an aging population, making conventional stimulus measures not sufficient to reinvigorate growth.

"It is important to balance short-term support to growth with long-term structural reforms," said Mara Warwick, the World Bank's country director for China, Mongolia, and South Korea.

"Addressing challenges in the property sector, strengthening social safety nets and improving local government finances will be essential to unlocking a sustained recovery. Clear communication of specific policy measures will be crucial to strengthening the confidence of markets and households."