China's economic slowdown is projected to intensify with the growth rate slowing down from 4.8% in 2024 to 4.3% in 2025. This despite the recent stimulus measures introduced by the country, according to a World Bank report.
This continuing slowdown is expected to present significant challenges for East Asia Pacific (EAP) countries that have historically benefited from its expansion, the report added. While 2024 witnessed a rebound in services consumption and exports in the world’s second-largest economy, ongoing weakness in the property market and low consumer confidence are expected to hinder future growth.
Although recent fiscal support may offer short-term relief, the report emphasised that sustainable growth will require deeper structural reforms.
This analysis arrives amid concerns over the lack of adequate economic stimulus from China. Officials from the National Development and Reform Commission refrained from announcing new stimulus measures, disappointing investors, despite expressing confidence in achieving this year's economic targets and promising further support. The World Bank's analysis revealed that between 1995 and 2019, China’s rising import demand contributed approximately 1% to the annual growth in developing countries — a figure that fell to 0.67 percentage points from 2020 to 2023 as China's growth slowed. Should China's growth decline to the projected 4.3% in 2025, the associated benefits for developing nations could diminish, potentially reducing their growth by 0.14% to 0.21%.
Moreover, if China's exports continue to exceed imports — showing a 4% increase in merchandise exports compared to a 2.8% rise in imports over the first seven months of this year — the negative impact of heightened competition in international markets may overshadow the benefits of increased demand, the report suggested.
Investment levels also play a critical role in China’s economic slowdown, with real estate investment plummeting 26.7% from its peak in June 2021 due to persistent challenges in the property market.
Simultaneously, China's manufacturing sector is grappling with demand-supply imbalances, as overall industrial capacity utilisation declined to 74.9% in the first half of 2024, down from 76.7% during the 2017-2019 period.
