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Highlights
- China’s growth forecasts upgraded for 2024 and 2025.
- New public spending measures introduced by Beijing.
- Greater fiscal support expected to drive economic rebound.
China’s economic outlook has improved following a series of policy moves by Beijing aimed at stimulating growth. Goldman Sachs has upgraded its growth forecasts for 2024 and 2025 after these measures were unveiled, including increased public spending efforts that could boost the nation’s economy.
The forecast for China’s gross domestic product (GDP) in 2024 is now set at 4.9%, up from an earlier estimate of 4.7%. In addition, the forecast for 2025 was revised upward to 4.7%, compared to the previous projection of 4.3%. These changes come after the Chinese government introduced new policies over the weekend, designed to address economic challenges and support growth.
According to a report from Goldman Sachs, China’s policymakers have shifted their approach to cyclical policy management, placing more emphasis on the economy's recovery. This change was highlighted by the bank’s economists, including Hui Shan, who pointed to the recent stimulus measures as a key factor influencing their revised forecasts.
The Chinese Finance Ministry has also promised stronger fiscal support, as noted during a major briefing. However, while these announcements suggest significant steps forward, some observers believe more measures are needed, particularly to address consumption and deflation concerns. The lack of direct initiatives aimed at boosting consumption could be seen as a gap in the current strategy.
One of the most notable developments in the new fiscal policy is the allocation of local government special bond funds. A total of 2.3 trillion yuan (around $325 billion) will be deployed in the fourth quarter, marking a significant increase in public spending. Goldman Sachs' report suggested that this approach could result in a more significant growth rebound than previously anticipated.
This new spending initiative points to a "back-loaded" schedule of public expenditure, where much of the fiscal support is concentrated toward the end of the year. The expectation is that these efforts will help China rebound from recent economic challenges, spurring growth at a faster rate than initially expected.
With these policy measures in place, China’s economic prospects for the next couple of years seem more positive, though some analysts remain cautious about the long-term impact on consumption and overall demand.
