World Bank projects China's GDP growth to slow to 4.4% in 2026

(CNA, Shanghai, July 7) The World Bank today released its latest China Economic Update, forecasting that China's GDP growth will slow to 4.4% in 2026, influenced by weak domestic demand and continued adjustments in the real estate market. The report also projects economic growth rates of 4.3% and 4.2% for 2027 and 2028, respectively.

The World Bank released its China Economic Update on its official website on July 7. The report indicated that China's economy started the year robustly, with strong investment in high-tech sectors and exports offsetting the impact of sluggish consumption. In the first quarter of 2026, Gross Domestic Product (GDP) grew by 5.0% year-on-year, higher than the 4.5% in the previous quarter. However, the real estate market continues to adjust due to weak housing demand, coupled with a reduced wealth effect from falling property prices and a weak labor market, leading residents to remain cautious in their spending.

The report stated that due to persistently weak domestic demand, China's economic growth rate is projected to slow to 4.4% in 2026. Consumption is expected to remain sluggish, the real estate market will continue to adjust, and profitability for some industries will remain weak, which will continue to suppress private investment. Export growth is also expected to slow down with weakening global demand. However, public infrastructure investment and the continued strong performance of high-tech industries will partially offset these adverse factors, leading to a moderate slowdown in overall economic growth in 2026.

The report points out that the risks facing China's economic outlook are broadly balanced. Although uncertainty in global energy supply has decreased in recent weeks and oil prices have fallen, the risk of renewed market volatility remains. If the real estate market undergoes further adjustments, it could drag down household consumption and investment in real estate and related sectors. However, if fiscal stimulus and AI-related investments exceed expectations, economic growth could surpass current forecasts.

The report predicts that in the medium term, economic growth will continue to slow, but the gradual progress of reforms will provide some support. Measures to rebalance consumption and improve productivity are expected to boost economic momentum, partially offsetting the structural drag from an aging population, high debt, and diminishing returns on capital. The economic growth rate is projected to be 4.3% in 2027 and 4.2% in 2028.

Roxanne Jones, World Bank Country Director for China, Mongolia, and Korea, stated that further improving the social security system is a key measure to boost consumption. Increasing benefit levels, including informal employment into the social security system, and providing relevant coverage based on place of residence can increase consumer confidence and reduce precautionary savings. (Editor: Chiu Kuo-chiang) 0707

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