The World Bank on Tuesday raised its 2025 growth forecast for China to 4.8%, up from its April estimate of 4%, signaling renewed optimism for the world’s second-largest economy despite an increasingly turbulent global trade environment fueled by U.S. tariffs.
According to CNBC, the revised outlook brings the projection closer to Beijing’s official target of around 5% GDP growth, marking a partial rebound for China’s economy following a year of mixed signals from the property market, consumer spending, and exports.
The Bank’s economists stopped short of citing a single reason for the upgraded forecast but noted that China has benefited from government stimulus and strong export activity, even as those supports are expected to fade in 2026.
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Trade tensions between Beijing and Washington have remained a central risk factor. In April, the U.S. sharply increased tariffs on Chinese imports to over 100%, the highest since the height of the 2018–2019 trade war. The two countries later reached a temporary truce, now set to last until mid-November. Tariffs currently stand at an average of 57.6% — more than double their level at the start of the year — underscoring continued friction in trade relations under President Donald Trump’s protectionist economic agenda.
The Trump administration has repeatedly defended the tariffs as necessary to “rebalance global trade,” but they have also rattled markets and prompted companies across Asia to adjust supply chains. Some American firms, including Apple, had earlier expanded manufacturing operations in India to hedge against the risks of overreliance on China. However, as the tariffs drag on, uncertainty continues to cloud global investment sentiment, weighing on cross-border business flows throughout Asia.
In response, China intensified stimulus measures in late 2024, introducing consumer trade-in programs and supporting industrial production. These policies helped buoy retail and export activity through much of 2025. Exports to Southeast Asia and Europe climbed steadily, offsetting sharp declines in shipments to the United States. Analysts say that part of the export strength also came from companies rushing to fulfill orders ahead of tariff increases.
Still, the World Bank cautioned that the momentum may not last. It projects that China’s GDP growth will slow to 4.2% in 2026 as export gains ease and the government tapers its stimulus to rein in public debt. The country’s real estate sector remains a drag, with investment plunging 12.9% in the first eight months of the year.
Retail sales also showed sluggish recovery, rising just 3.4% year-on-year in August, missing analysts’ expectations. Early data from the eight-day “Golden Week” holiday suggest weak consumer spending. Nomura’s Chief China Economist, Ting Lu, noted that while passenger trips rose 5.4% year-on-year, the pace was much slower than during the May holiday season.
“Actual consumption growth could be even weaker than the data suggest,” Lu said, citing calendar effects and slowing household sentiment.
The World Bank’s report further highlighted China’s structural challenges, including youth unemployment — with one in seven young people jobless — an aging population, and slower productivity growth compared to other major economies. It also noted that Chinese startups generate fewer jobs relative to their U.S. counterparts, largely due to the dominance of state-owned enterprises.
According to the Bank’s estimates, a 1 percentage point decline in China’s GDP can reduce growth in the rest of developing East Asia and the Pacific by 0.3 percentage points. With China’s upgraded projection, the region’s overall growth outlook has been lifted to 4.8% in 2025, up from 4% previously forecast.
Globally, however, the World Bank remains cautious. In June, it lowered its 2025 world growth forecast to 2.3%, citing trade uncertainty and geopolitical tensions, warning that the slowdown would mark the weakest expansion since the 2008 financial crisis outside of global recessions.
China’s near-term prospects may have improved, but with Trump’s tariffs still in place and global trade increasingly fragmented, economists say Beijing faces the daunting task of sustaining growth while rebalancing its economy toward domestic consumption and innovation-driven sectors.