A view of the Suzhou Industrial Park Photo: Courtesy of Suzhou Industrial Park publicity authority

The World Bank published its latest China Economic Update on Thursday, revising its forecast for China's 2024 economic growth upward to 4.9 percent, a 0.1 percentage point increase from its June prediction.

The revision reflects the effect of recent policy easing and near-term export strength, according to the report the World Bank sent to the Global Times.

Despite the headwinds from the property sector and consumer sentiment, China achieved a solid growth rate of 4.8 percent over the first three quarters of 2024. Recent high-frequency data revealed some policy-driven improvement in domestic demand, it said.

Retail sales of household appliances, furniture, and automobiles have rebounded since September, spurred by a 150-billion-yuan ($20.55 billion) consumer trade-in initiative. A 150-billion-yuan equipment upgrade program for firms has supported manufacturing investment growth. Infrastructure investment rose by 13.0 percent year-on-year in September-November, supported in part by the acceleration in local government special bond issuance, according to the report. It also revised up China's economic growth forecast for next year to 4.5 percent.

Also, in its latest Asian Development Outlook released in December, the Asian Development Bank maintained its previous growth forecasts for China at 4.8 percent for 2024.

The global organizations' reports came as the world's second-largest economy is on track to achieve its full-year growth target.

China's economy is projected to grow by around 5 percent in 2024, contributing nearly 30 percent to global growth, Han Wenxiu, executive deputy director of the Office of the Central Committee for Financial and Economic Affairs said on December 14 at an economic conference held by the China Center for International Economic Exchanges in Beijing, China News Agency reported.

Looking ahead, the World Bank suggested in its latest China Economic Update structural reforms to revitalize growth.

"It is important to balance short-term support to growth with long-term structural reforms," said Mara Warwick, World Bank Country Director for China, Mongolia, and 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, Warwick said.  

The annual Central Economic Work Conference held in early December in Beijing set priorities for China's economic agenda in 2025. For next year, the meeting emphasized the need to maintain steady economic growth, keep employment and prices generally stable, ensure a basic equilibrium in the balance of payments, and increase residents' income in step with economic growth.

The meeting called for better coordination between fiscal, monetary, employment, industrial, regional, trade, environmental and regulatory policies and the country's reform and opening-up measures.

Wen Bin, chief economist at China Minsheng Bank, wrote in a note sent to the Global Times that policymakers are expected to set GDP growth target of around 5 percent in 2025. "By enhancing counter-cyclical adjustments, we can guide the economy toward its potential growth rate without increasing inflation, making a target of around 5 percent achievable," he said.

Wen forecast that the country's deficit-to-GDP ratio will be raised to 3.8 percent in 2025, indicating an increase of approximately 1 trillion yuan over the 2024 level. 

China has the conditions and room to strengthen counter-cyclical adjustments, providing strong policy support for achieving annual goals and tasks, said an official from the Office of the Central Committee for Financial and Economic Affairs, the Xinhua News Agency reported on December 16.

Next year, China will adopt a more proactive fiscal policy, shift to a moderately loose monetary stance after maintaining a prudent policy for 14 consecutive years, according to the official.

The Central Economic Work Conference has signaled a shift toward a more proactive macroeconomic policy, which will help bolster confidence and stabilize market expectations to fulfill the goals and tasks in the 14th Five-Year Plan (2021-25) with high quality and lay a solid foundation for a good start to the 15th Five-Year Plan (2026-30), Li Chang'an, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times.

Li said that stronger policies are anticipated in 2025 to boost household income and strengthen consumption capacity in a bid to bolster spending and expand effective domestic demand.