China Economy Outlook Brightens as World Bank Lifts 2025 Growth Forecast
China’s economy is showing unexpected resilience heading into 2025. The World Bank has revised its growth outlook upward to 4.8%, a notable jump from April’s 4% forecast, putting it nearly in line with Beijing’s 5% target.
The adjustment follows a year of intense trade friction with the U.S., heavy government support, and a burst of export activity that temporarily offset weakness at home.
Short-Term Boost From Tariff Rush
The upgrade comes as businesses rush to ship goods ahead of higher tariffs, with U.S. import duties on Chinese products now averaging 57.6%, more than twice their level at the start of 2025.
A fragile truce, brokered in midyear by U.S. Treasury Secretary Scott Bessent, provided a short window of relief. The surge in exports has lifted industrial activity, though the World Bank cautions that this boost will likely fade once the stockpiling ends.
Stimulus Keeps the Economy Afloat
Beijing’s targeted stimulus, including trade-in programs and consumer incentives, helped stabilize growth in late 2024. Yet data shows domestic demand remains soft. Retail sales rose only 3.4% in August, while property investment plunged nearly 13% in the first eight months. Even the extended Golden Week holiday failed to spark spending, revealing deep-seated caution among households still weighed down by job insecurity and falling home values.
Analysts expect the economy to lose speed again once stimulus efforts ease and export momentum fades, with GDP growth projected to slow to 4.2% in 2026. Structural challenges—ranging from youth unemployment near 14% to a graying population and sluggish private investment—remain major obstacles to sustained recovery.
Global Ripple Effects
China’s outlook matters well beyond its borders. The World Bank estimates that a one-point decline in China’s growth could trim 0.3 percentage points from the rest of developing East Asia. With the revised forecast, the region as a whole is now expected to expand by 4.8% in 2025, up from April’s 4%.
Globally, however, growth is still fragile. The World Bank sees the world economy slowing to 2.3% next year amid persistent trade disruptions and cautious investment. The brighter outlook for China provides a brief sense of relief—but also a reminder that the recovery still leans heavily on temporary measures.
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