The International Monetary Fund says China’s economic decline is likely to continue over the next four years as the world’s second largest economy deals with a range of challenges from a rapidly aging population, higher unemployment and a property crisis.
In a report released, the global financial policy body – also known as the IMF – projected China’s economic growth would drop to 4.6% this year, down from its 5.2% growth in 2023, and fall further to 3.4% by 2028.
The property market, which has historically represented about a quarter of China’s GDP, has been a particular area of trouble for the Chinese economy lately, with a Hong Kong court on Monday ordering Chinese property giant China Evergrande, mired in more than $300 billion of debt, to liquidate.
An IMF analysis released Friday predicted real estate investment is likely to fall 30% to 60% in the next ten years relative to 2022 levels.
“Absent a comprehensive restructuring policy package for the troubled property sector, real estate investment could drop more than expected, and for longer, with negative implications for domestic growth and trading partners,” the IMF report read.
However, Zhang Zhengxin, the IMF’s executive director for China, disagreed with the fund’s findings in a January 10 statement included in the report.
“The Report warns of the risks in China’s real estate market, but staff’s estimate is, to some extent, too pessimistic,” Zhang wrote. “Since August 2023, the real estate market transactions have experienced general improvement, which has gradually strengthened market confidence.”
