World Bank Raises China Growth Forecast to 4.8% for 2025
The World Bank announced on Tuesday an upward revision to its 2025 economic growth forecast for China, increasing the projection to 4.8% from the previous 4% estimated in April. This adjustment brings the forecast closer to Beijing’s official target of approximately 5% GDP growth for the year.
Trade Tensions and Economic Support Measures
The forecast revision comes amid heightened U.S.-China trade tensions that escalated in April, with U.S. tariffs on Chinese imports temporarily exceeding 100%. Following a trade truce effective until mid-November, tariffs currently stand at 57.6%, more than double the levels at the start of 2025.
China’s economy has benefited from targeted government stimulus, including consumer trade-in programs and a late 2024 stimulus boost, which have bolstered retail sales and export performance. These measures have helped offset domestic headwinds such as a persistent real estate slump and weak consumer demand.
Exports Drive Growth Amid Domestic Headwinds
China’s exports remain a key growth driver, with shipments to Southeast Asia and Europe compensating for a sharp decline in exports to the United States. Businesses accelerated orders ahead of tariff increases, providing additional export momentum.
However, domestic demand shows signs of weakness. Retail sales rose only 3.4% year-on-year in August, missing expectations, while real estate investment contracted by 12.9% in the first eight months of 2025. Preliminary data from the recent “Golden Week” holiday indicated sluggish consumer spending, with passenger trips increasing at a slower pace compared to previous holidays.
“Actual consumption growth could be even weaker than the data suggest,” said Nomura’s Chief China Economist Ting Lu, highlighting the impact of the combined National Day and Mid-Autumn Festival holidays on consumption patterns.
Outlook for 2026 and Structural Challenges
The World Bank forecasts China’s GDP growth to moderate to 4.2% in 2026, driven by slower export growth and a likely reduction in stimulus efforts aimed at limiting public debt expansion. Structural challenges, including technological disruptions, an aging population, and a high youth unemployment rate, remain persistent concerns.
Moreover, the World Bank noted that Chinese startups increase employment at a significantly lower rate compared to the U.S., partly due to the dominance of state-owned enterprises in China’s economy.
Regional Economic Implications
A 1 percentage point decline in China’s GDP growth is estimated to reduce growth in the rest of developing East Asia and the Pacific by 0.3 percentage points. With the upgraded China forecast, the World Bank now expects the region to expand by 4.8% in 2025, up from the 4% forecast earlier this year.
Despite this positive revision for China and the region, the World Bank cautioned that global economic growth is expected to remain subdued, with a 2025 global forecast of 2.3%, marking the slowest expansion since 2008 outside of recessions.
FinOracleAI — Market View
The World Bank’s upward revision of China’s growth outlook signals resilience in the face of heightened trade tensions and domestic economic challenges. Government stimulus and robust export activity have underpinned this positive adjustment, although risks remain from slowing domestic demand and structural headwinds.
- Opportunities: Continued export diversification, targeted stimulus to stabilize consumption, and regional growth momentum.
- Risks: Potential fading of stimulus support in 2026, persistent real estate sector weakness, and elevated youth unemployment.
- Trade tensions with the U.S. could re-escalate, impacting tariffs and supply chains.
- Structural demographic and technological challenges may constrain long-term growth.
Impact: The revised growth forecast is a positive signal for China’s economy and the broader East Asia-Pacific region, though caution is warranted due to underlying vulnerabilities and external uncertainties.
