A worker rides a bicycle in front of a residential complex under construction in Beijing on May 17, 2024.
Jade Gao | Afp | Getty Images
BEIJING — The International Monetary Fund on Wednesday raised its forecast for China’s growth this year to 5 percent, from 4.6 percent previously, due to “strong” first-quarter figures and recent policy measures.
This upgrade follows an IMF visit to China for regular assessment. The organization now expects the Chinese economy to grow by 4.5% in 2025, compared to 4.1% previously forecast.
But by 2029, they forecast China’s growth will slow to 3.3% due to an aging population and slowing productivity growth. This is down from the IMF’s earlier forecast of 3.5% growth over the medium term.
China’s economy grew at a better-than-expected 5.3% in the first quarter, supported by strong exports. Data for April showed that consumer spending remained sluggish, while industrial activity picked up.
About two weeks ago, Chinese authorities announced sweeping measures to support the struggling real estate sector, including removing the floor on mortgage rates.
These policy measures are “welcome,” but more comprehensive action is needed, Gita Gopinath, the IMF’s first deputy managing director, said in a statement.
“The priority should be to mobilize central government resources to protect buyers of pre-sold unfinished houses and expedite the completion of unfinished pre-sold houses, thereby paving the way for the resolution of insolvent developers,” she said.
“Allowing greater pricing flexibility, while monitoring and mitigating potential macro-financial fallout, can further stimulate housing demand and help restore balance.”
The IMF statement said that during his visit to China this month, Gopinath met with People’s Bank of China Governor Pan Gongsheng, Vice Minister of Finance Liao Min, Vice Minister of Commerce Wang Shouwen, the Vice Governor of the People’s Bank of China, Xuan Changneng, and the National Financial Regulatory Administration. Vice President Xiao Yuanqi.
“Short-term macroeconomic policies should aim to support domestic demand and mitigate downside risks,” Gopinath said.
“Achieving high-quality growth will require structural reforms to counter headwinds and address underlying imbalances,” she added.
At a meeting on Monday, Chinese President Xi Jinping stressed the need to promote “sufficient and high-quality employment,” according to state media.
“Xi specifically emphasized improving policies to support the employment of university graduates and other young people,” Xinhua reported.
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