The World Bank raises China’s growth forecast, but calls for deep reforms

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The World Bank reiterated its call for President Xi Jinping to undertake a deep overhaul of its latest economic forecast for China to address confidence and structural problems in the world’s second-largest economy.

The multilateral lender said it had revised its forecast on Thursday. ChinaNext year’s gross domestic product growth will rise 0.4 percent to 4.5 percent, reflecting a series of policy easing measures announced by Beijing over the past three months, as well as the strength of the country’s exports.

The World Bank raised this year’s full-year forecast by 0.1 percentage point to 4.9 percent. The economy recorded a growth of 4.8 percent in the first nine months of the year.

The lender also pointed out Recent commitments Xi economic planners to improve support for social welfare and consumption and to implement fiscal and tax system reforms. But he said more detail was needed to strengthen family and business confidence.

The World Bank has reiterated its call for deep reforms in China’s education, health care, social security and pensions, saying “traditional stimulus measures are insufficient to stimulate growth.” hukou Family registration system.

China’s economic growth has slowed this year. Weak domestic demand and deep inflation pressures, which have eroded household wealth following a three-year slump in the property market.

Xi has focused the economy on high-tech manufacturing and industry, but there are growing concerns that exports, which have helped fuel growth, will. They face a new threat of tariffs from Donald Trump.He will return as US President next month.

The World Bank has released a new analysis of economic activity in China between 2010 and 2021, which shows that more than half a billion people may be at risk of falling out of poverty and out of the middle class within a generation. According to the descriptions.

The bank credited Beijing with “remarkable success” in lifting 800 million citizens out of poverty over the past 40 years, during which the proportion of the population with low incomes fell from 62.3 percent to 17 percent.

But it found that 38.2 percent of China’s 1.4 billion people are in the “vulnerable middle class” above the minimum income line “not at risk of falling below it.” The low income level is defined as up to $6.85 per day using the 2017 Purchasing Power Parity calculation.

“No other region has seen faster growth in the share of the secure middle class population than China,” the World Bank said. However, most of the population is not economically secure.

32.1 percent of what was considered “safe” in the middle class and In 2021, the lowest-income 17 percent of the population was more vulnerable than in the middle of the Covid pandemic.

Bert Hoffman, the former China country director at the World Bank’s Beijing-based National University of Singapore, wrote earlier this month that China’s economy’s post-Covid underperformance has exposed weaknesses built up after major reforms to its fiscal system. In 1994

However, in the second half of 2024, policymakers noted some “promising signs” that reforms are underway that will improve income distribution and social security.

“Fiscal reforms are now tied to the Chinese Communist Party’s central goal of ‘high-quality growth,’ and the leadership recognizes that reforms must bring about a fiscal system that can bring efficiency, fairness, and stability,” Hoffman wrote. Forecast to 2025 for the Asia Society.

“The key question is whether the reform will go far enough to transform fiscal policy into a powerful tool for resource allocation, economic stability and income distribution.”