China’s economy is on the mend, with a projected GDP growth of 5% in 2024, bolstered by consumption, investment, and policy initiatives. However, external uncertainties and domestic financial pressures pose significant risks.
Key Takeaways
- China’s economic recovery is gaining traction with projected GDP growth of 5.3 percent in 2024 and 4.9 percent in 2025, driven by consumption, investment, and a rebound in external demand.
- The balance of risks is slightly tilted to the downside due to uncertainties in the external sector, potential setbacks in the real estate sector recovery, and persistent financial strains on some local governments.
- To sustain economic growth, China must intensify structural reforms, implement fiscal consolidation, address local government debt risks, provide targeted support to lagging sectors, and upgrade its labor force to transition to a technologically advanced
China’s economic recovery has gained momentum, primarily driven by external demand and reduced impacts from the real estate sector correction. The GDP growth is projected to be 5.3% in 2024 and 4.9% in 2025, as highlighted by the ASEAN+3 Macroeconomic Research Office (AMRO) during its Annual Consultation Visit to China. Authorities are restructuring the economy to enhance growth quality, transitioning towards a technologically advanced economy.
Key Discussions and Findings
AMRO’s discussions with Chinese policymakers focused on economic recovery drivers, short-term risks, and geoeconomic fragmentation impacts. Despite strong external challenges, China’s economy grew by 5.2% in 2023. Both consumption and investment in high-tech sectors are expected to drive growth. Real estate is undergoing a major correction, with recovery anticipated by mid-2025.
Risks and Policy Recommendations
Risks include potential US monetary policy tightening, geopolitical tensions, and real estate sector setbacks. To sustain growth, China should continue structural reforms, manage fiscal policies to reduce debt, and support the financial and real estate sectors. Enhancing the labor force, improving migrant worker conditions, and strengthening the social security system are also crucial for long-term growth. AMRO emphasizes China’s commitment to multilateral trade rules and welcomes the Belt and Road Initiative’s shift towards renewable energy projects.
About AMRO
The ASEAN+3 Macroeconomic Research Office (AMRO) aims to ensure macroeconomic and financial stability in the ASEAN+3 region. It conducts macroeconomic surveillance, supports regional financial arrangements, and provides technical assistance to its members, which include the 10 ASEAN nations plus China, Hong Kong, Japan, and Korea.
Source: ASEAN+3 Macroeconomic Research Office
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