The International Monetary Fund maintained its economic growth forecast for China at 4.5% this year but warned of risks from weak domestic demand and a slowing global economy.
China’s economy has proved resilient in the face of multiple shocks, boosted by robust exports and fiscal stimulus, and it remains a major driver of global growth. The economy expanded by 5% in 2025, and according to International Monetary Fund it is expected a 4.5% growth this year, up 0.3 percentage points from October forecast.
Despite this resilience, the growth model of the world’s second-largest economy faces increasing challenges.
The IMF considers the downturn in the property sector as the main domestic risk with the growth increasingly dependent on external demand.
Yet China cannot count on ever higher exports to drive durable growth in the coming years.
The IMF urged policymakers to make transitioning to a consumption-led model the overarching priority.
That makes pivoting to consumption-led growth, as it said, the “overarching policy priority.”
China’s policymakers recognize these challenges and already are taking steps. The IMF report observed that policymakers adopted a more expansionary fiscal policy stance in 2025, that involved targeted social subsidies, and reduced over-investment in some industries, while easing monetary policy.
Looking ahead, the 15th five-year plan (2026-30) prioritizes increasing consumption as a driver of economic growth.
“These are helpful measures, but China can do more to increase consumption and domestic demand for years to come,” the IMF said, adding that a more forceful macroeconomic expansion will be critical.
“So, too, will be efforts to strengthen social safety nets and support the recovery of the property sector,” it added.
