ISTANBUL

The World Bank reported Thursday that it raised China's economic growth expectations to 4.9% for this year, as accommodative fiscal and monetary policies supported domestic consumption and investment, while demand from developing countries sustained exports.

This was a 0.4 percentage point increase from the World Bank's previous projection.

For 2026, the world's second-biggest economy is expected to expand 4.4%, the World Bank said, adding that recent fiscal measures, alongside some stability in global trade policy, are expected to support investment and exports.

"China’s economy maintained solid momentum in the third quarter of 2025, bringing year-to-date gross domestic product (GDP) growth to 5.2% year on year," the bank said in a statement.

However, it stated that households remained cautious in their spending amid a soft labor market and declining home prices.

Due to the property sector's adjustment, slower manufacturing and infrastructure investment as a result of profit pressures, and tighter local government finances, investment growth slowed in the third quarter, according to the statement.

“China’s growth in the coming years will depend more on domestic demand,” said Mara Warwick, World Bank Division Director for China, Mongolia, and Korea.

“In addition to short-term fiscal stimulus, advancing structural reforms of the social protection system and creating a more predictable environment for businesses can help boost confidence and lay the groundwork for resilient, sustainable growth.”

According to the World Bank, the outlook's risks are still largely balanced. Consumption and investment may be negatively impacted by the difficulties in the real estate industry, muted earning prospects, weaker labor markets, and trade policy uncertainties for longer than anticipated.

"On the upside, higher-than-expected fiscal spending, including stronger measures to enhance social protection, and more decisive policy actions to stabilize the property sector could lift growth above current projections," it added.