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The World Bank raised its near-term economic forecasts for China as it reiterated calls for President Xi Jinping to pursue deep reforms to address lagging confidence and structural problems in the world’s second-largest economy. world.

The multilateral lender said on Thursday it had revised its forecast ChinaNext year’s GDP growth is up 0.4 percentage points to 4.5 percent, reflecting a series of policy easing measures announced by Beijing over the past three months as well as strength in the country’s exports. .

The World Bank also raised its full-year forecast for this year by 0.1 percentage points to 4.9 percent, just shy of Beijing’s own growth target for 2024 of about 5 percent. The economy recorded a growth of 4.8 percent in the first nine months of the year.

The lender also noticed new promises Xi’s economic planners to improve support for social welfare and consumption, and also to implement fiscal and tax reform. But it said more details were needed to strengthen household and business confidence.

“The usual stimulus measures are not enough to reinvigorate growth,” the World Bank said, reiterating calls for deeper reforms across China’s education, health care, defense of social welfare, pension and the hukou household registration system.

China’s economic growth slowed down this year weak domestic demand and deep deflationary pressures, after a three-year slump in the property market eroded household wealth.

Xi has shifted the economy’s focus to investment in high-tech manufacturing and industry, but there is growing concern that exports, which have helped boost growth, faces a new threat of tariffs under Donald Trumpwho will return as US president next month.

The World Bank also released a new analysis of China’s economic performance for 2010-21, showing that more than half a billion people are likely to be at risk of falling out of the middle class alone. generations after rising from poverty, according to his definitions.

The bank credited Beijing with “dramatic success” in lifting 800 million people out of poverty over the past 40 years, and it noted that over time the low-income share of the population has fallen -good, from 62.3 percent to 17 percent.

But it also found that 38.2 per cent of China’s 1.4bn people are in the “vulnerable middle class” – above the defined low-income line but 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 in the world has witnessed faster growth in the share of the secure middle-class population than China,” the World Bank said. “However, a large majority of the population is still economically insecure.”

That vulnerable part of the population is greater than the 32.1 percent considered “secure” in the middle class and the 17 percent that remain low-income in 2021, in the middle of the Covid pandemic.

Bert Hofman, former Beijing-based country director for China at the World Bank, now at the National University of Singapore, wrote earlier this month that China’s economic lack of post-Covid performance exposed weaknesses that had built up since then. of the last significant fiscal change. system in 1994.

However, he noted some “optimistic signs” that reforms are in the pipeline, following statements by policymakers in the second half of 2024 that focus on improving income distribution and social security.

“Today’s fiscal reforms are clearly tied to the Chinese Communist party’s core goal of ‘high-quality development’, and the leadership recognizes that the reforms must result in a fiscal system that delivers of efficiency, equity, and stability,” writes Hofman in a 2025 forecast for the Asia Society.

“An important question is whether the reforms will go far enough to make fiscal policy a powerful tool for resource allocation, economic stability, and income distribution.”