Publication: China Economic Update, June 2025: Unlocking Consumption
Loading...
Published
2025-07-08
ISSN
Date
2025-07-08
Author(s)
Editor(s)
Abstract
China’s economy has maintained solid growth momentum in early 2025, supported in part by monetary, fiscal, and property sector policy easing. However, growth is projected to moderate from 5.0 percent in 2024 to 4.5 percent in 2025 and 4.0 percent in 2026, as global trade restrictions and uncertainty weigh on exports, manufacturing investment, and labor demand. Beyond short-term stimulus, China will need to rely more on household consumption as an engine of growth. A sustained improvement in household consumption will require greater reform ambition, including (i) redirecting fiscal resources towards healthcare and social protection to reduce precautionary savings, (ii) addressing local governments' financial constraints to help maintain public services and drive public consumption, (iii) pursuing a more progressive fiscal system to stimulate consumption as lower-income households have a higher propensity to spend, and (iv) tackling the property sector overhang to restore household wealth and confidence.
Link to Data Set
Citation
“World Bank. 2025. China Economic Update, June 2025: Unlocking Consumption. © World Bank. http://hdl.handle.net/10986/43431 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication India Economic Update, June 2011(Washington, DC, 2011-06)In fiscal year 2010-11, India's economy has expanded at a rate close to that observed prior to the global financial crisis. However, growth in the second half of the year slowed, and the performance of industry and investment has been particularly disappointing. Despite some fiscal consolidation and monetary tightening, inflation has emerged as a serious concern because of its effects on the poor, who are usually less able to protect themselves against rising prices, and because of its dampening effects on long-term investment, which is sensitive to interest rate expectations. India's economic growth reached 8.5 percent, helped by a strong rebound of the agriculture sector because of good rains in the 2010 monsoon season against the near-drought conditions of 2009. On the external side, exports staged an extraordinary recovery and the current account deficit narrowed, while capital flows slowed driven by a pronounced decline in foreign direct investment. Foreign institutional investment remained robust, however, and external borrowing increased to compensate partially for the decline in Foreign Direct Investment (FDI). The rupee remained stable against the U.S. dollar but showed a small real appreciation against a 36-currency trade weighted index, and Reserve Bank of India foreign reserves increased to more than $310 billion. The central government budget deficit for FY2010-11 is estimated to have reached 6 percent of Gross Domestic Product (GDP), an important contraction from the widened fiscal stance of FY2009-10. Budget implementation benefited from higher-than-expected growth in nominal GDP and related higher tax intake; although the tax-to-GDP ratio is still significantly lower than in FY2007-08. The spending-to-GDP ratio, on the other hand, was reduced by 0.7 percent of GDP despite two supplementary demands for grants.Publication China Economic Update, June 2014(World Bank, Beijing, 2014-06)Chinas economic growth is gradually slowing as the structural transformation of the economy continues. Output grew by 7.7 percent in 2013, matching its 2012 growth rate and exceeding the governments 7.5 percent indicative target. In recent months economic activity, including industrial production, started to show signs of acceleration. The recent acceleration, expected to continue into the next two quarters, is partly reflecting the effect of new growth-supporting measures, robust consumption, and a recovery of external demand. Chinas growth will continue to moderate over the medium term, and the structural shifts will become more evident. Growth in China is expected to decrease marginally to 7.6 percent in 2014 and 7.5 percent in 2015, from 7.7 percent in 2013. Fiscal and financial sector reforms are needed to address financial stability risks in the medium run. The first task involves effectively managing the process of rapid credit growth, including less well-regulated shadow banking system. The second involves gradual and orderly deleveraging of large stock of local government debt accumulated through off-budget and quasi-fiscal platforms.Publication Angola Economic Update, June 2014(Washington, DC, 2014-06)Angola's economy decelerated in 2013 due to the weak performance of the oil sector but the non-oil economy expanded rapidly. Similarly, lower oil related export earnings and higher imports narrowed the current account surplus. Enhancing export competitiveness and implementing tax related reforms will reduce the co-movement between the current account and the fiscal account balances. Expanded agricultural output and lower food import prices helped curb the inflation rate to a single digit. While the non-oil economy expands, maintaining the observed level of international reserves will help shield the country from potential oil price fluctuations. This economic update analyzes recent economic developments in Angola and situates them in a medium-term global context. It evaluates the implications of macroeconomic trends and policy reforms in terms of the government's stated development objectives.Publication Mongolia Quarterly Economic Update, June 2012(Washington, DC, 2012-06)The World Bank's Mongolia quarterly economic update assesses recent economic and social developments and policies in Mongolia. It also presents findings of ongoing World Bank activities in Mongolia. The Mongolian economy is continuing to grow at a very rapid pace, expanding by 16.7 percent year-on-year (yoy) in first quarter (Q1). This high growth however, is also fuelling inflation which touched 16 percent in April, well above the Bank of Mongolia's (BoM) inflation target of 10 percent. Increasing government spending on wages and salaries, large cash handouts to the general population, and burgeoning capital expenditures are adding to the demand pressures. Meanwhile, the worsening global economic outlook, in particular a faster than expected slowdown in China, Mongolia's largest trading partner, has negatively impacted export growth, resulting in deterioration in external balances. Under these circumstances, the advice to Mongolian policy-makers is to 'hold your horses' and adopt a more cautious macro-economic stance, tightening both monetary and fiscal policy to prevent further over-heating of the economy. The global economic outlook has deteriorated considerably in recent months. Financial conditions in high-income Europe, higher oil prices, and, most importantly, the slowing Chinese economy pose risks for Mongolia. The channels through which these operate include financial and trade linkages namely volatility in commodity prices and through demand from China for its mineral exports. Indeed, signs of these are already visible as demonstrated by the decline in exports in April. Other financial market linkages should also not be discounted: Mongolia's banking system, which has shown signs of overheating over the past year, is highly dollarized, with about a third of deposits denominated in dollars and easy convertibility out of the Mongolia Togrog. A sharp economic slowdown and/or an increased macroeconomic instability could expose the liquidity and asset quality vulnerabilities in individual banks and system overall.Publication China : Mid-Term Evaluation of China's Eleventh Five-Year(World Bank, 2009-01-01)This mid-term review has been undertaken to assess progress in the implementation of the Eleventh Five-Year Plan (11th 5YP) during its first two years and a half, draw preliminary lessons, and make recommendations for policy adjustments. The review examines the following strategic objectives: ensuring the stable operation of the macro economy and improving living standards; optimizing and upgrading of industrial structure; increasing energy efficiency; coordinating urban and rural development; improving basic public services; and enhancing sustainable development. Domestically, natural disasters-the severe storms, winter and the massive earthquake in Sichuan-took a heavy toll. Externally, global demand has slowed owing to the slump in the United States (U.S.) housing market and the related credit crisis and increased risk aversion. International oil, food, and other commodity prices have soared. These developments pose new challenges. But they also reinforce the appropriateness of the policy priorities of the 11th 5YP to increase the economy's resilience and ensure sustainable growth. The objectives and tasks set out in the 5YP are consistent with China's development challenges and government priorities Moreover, the quantitative indicators generally accord well with the overall guiding principles, orientations, and objectives, suggesting that these have been successfully put into operation.
Users also downloaded
Showing related downloaded files
Publication From Recovery to Rebalancing(Washington, DC: World Bank, 2020-12)Following a collapse in the first quarter of 2020, economic activity in China has normalized faster than expected, aided by an effective pandemic-control strategy, strong policy support, and resilient exports. While swift, the recovery has been uneven, with domestic demand recovering more slowly than production and consumption more slowly than investment. Real GDP growth is projected to slow to 2 percent this year before accelerating to 7.9 percent in 2021, as consumer spending and business investment continue to catch up, along with improving corporate profits, labor market conditions, and incomes. The growth outlook is predicated on the assumption that well-targeted containment efforts supported by the gradual rollout of effective COVID-19 vaccines starting in early 2021 will continue to keep new infection rates low and prevent the resurgence of large-scale outbreaks. Economic rebalancing toward services, innovation and consumption driven growth has important spatial implications. This issue is at the heart of the exploratory analysis of the focus chapter in this report. While regional disparities in output, labor productivity, and income have narrowed since the mid-2000s, convergence was driven by a surge in investment in lagging regions. This has led to growing financial imbalances, mounting debt, and diminishing returns that constrained further investment-driven catch-up growth. Moreover, as China seeks to rebalance its economy from investment to a more innovation- and services-driven growth model, it will need to embrace the growth potential of its most developed and innovative metropolitan areas and city clusters, shifting the growth pole back to the coastal regions. Against this backdrop, policies to foster market integration and reduce spatial frictions in factor markets would enable a more efficient spatial allocation of labor and capital, harnessing the benefits of agglomeration and urbanization. Such a shift will inevitably create tensions with other policy objectives, notably the aim to reduce inequality. Therefore, it will need to be accompanied by fiscal policies to ensure a more equitable delivery of public services and investment in human capital to mitigate the very real consequences of resultant spatial disparities on people’s lives and opportunities.Publication World Development Report 2021(Washington, DC: World Bank, 2021-03-24)Today’s unprecedented growth of data and their ubiquity in our lives are signs that the data revolution is transforming the world. And yet much of the value of data remains untapped. Data collected for one purpose have the potential to generate economic and social value in applications far beyond those originally anticipated. But many barriers stand in the way, ranging from misaligned incentives and incompatible data systems to a fundamental lack of trust. World Development Report 2021: Data for Better Lives explores the tremendous potential of the changing data landscape to improve the lives of poor people, while also acknowledging its potential to open back doors that can harm individuals, businesses, and societies. To address this tension between the helpful and harmful potential of data, this Report calls for a new social contract that enables the use and reuse of data to create economic and social value, ensures equitable access to that value, and fosters trust that data will not be misused in harmful ways. This Report begins by assessing how better use and reuse of data can enhance the design of public policies, programs, and service delivery, as well as improve market efficiency and job creation through private sector growth. Because better data governance is key to realizing this value, the Report then looks at how infrastructure policy, data regulation, economic policies, and institutional capabilities enable the sharing of data for their economic and social benefits, while safeguarding against harmful outcomes. The Report concludes by pulling together the pieces and offering an aspirational vision of an integrated national data system that would deliver on the promise of producing high-quality data and making them accessible in a way that promotes their safe use and reuse. By examining these opportunities and challenges, the Report shows how data can benefit the lives of all people, but particularly poor people in low- and middle-income countries.Publication China Economic Update, June 2024(Washington, DC: World Bank, 2024-06-14)Economic activity picked up in China in early 2024, buoyed by stronger exports. Meanwhile, growth in domestic demand moderated. Manufacturing and infrastructure investment and consumer spending on services remained robust, while the property market correction continued. In the long term, China’s rapidly aging population will have wide-ranging economic impacts, but with the right policies the demographic transition is manageable. The economic challenges from an aging population can be overcome with policies that increase labor force participation and extend productive working lives. Affordable childcare, better work-life balance, elimination of gender bias in hiring, a higher retirement age, skills upgrading, and lifelong learning are measures that could expand China’s workforce and make it more productive.Publication Bulgaria - Integrated State-Owned Enterprises Framework (iSOEF) Assessment(Washington, DC, 2021)Bulgaria's transition to a market economy involved massive privatizations over the past few decades, however the central government still retains a portfolio of State-Owned Enterprises (SOEs) which includes some of the largest companies in terms of assets and revenues and dominates strategic sectors such as energy and transport. This report applies the new World Bank integrated State-Owned Enterprises Framework (iSOEF) to assess the Bulgarian state-owned enterprise (SOE) sector and help to identify ways to strengthen its corporate governance and performance. The report provides one of the first comprehensive applications of the World Bank's new iSOEF in Eastern Europe. The report outlines the SOE landscape in Bulgaria and then assesses two key aspects: SOEs fiscal impact and their corporate governance and accountability mechanisms. Leveraging World Bank expertise, this multidimensional assessment looks at the interrelationships of the challenges and opportunities faced by Bulgarian SOEs to propose holistic and sequenced recommendations that aim to strengthen governance and performance. The primary audience of the iSOEF assessment is the government of the Republic of Bulgaria, in particular the Ministry of Finance, the Ministry of Economy and Industry, the Public Enterprises and Control Agency (PECA), and other relevant stakeholders.Publication Georgia Systematic Country Diagnostic Update(Washington, DC: World Bank, 2023-10-26)Since the release of the first Georgia Systematic Country Diagnostic (SCD) in 2018 Georgia has regained upper middle-income status and has shown resilience amid a rapidly changing external environment. Economic growth has remained robust despite shocks, driven by capital accumulation. Consistent with the slowdown in the labor contribution to growth, poverty reduction has slowed in recent years, as income from wages has decreased. Georgia has struggled to create quality jobs, and labor force participation has declined. Constraints to firm productivity and growth limit the ability of enterprises to create good jobs. Georgia has made significant strides in access to social services, but human capital formation is undermined by quality constraints, particularly in education. In terms of sustainability, Georgia has so far been unable to decouple carbon emissions from economic growth. The report discusses as well other aspects of resilience, in terms of response to shocks and overall governance. Going forward, this SCD update identifies ten policy objectives and four high level outcomes (HLOs). These HLOs are: (i) enhanced creation of good quality jobs by boosting productivity; (ii) improved and more equitable human capital; (iii) enhanced readiness to climate change and the green transition; and (iv) improved resilience to shocks.