BEIJING: Foreign institutions have raised their forecasts for China’s economic growth this year amid the nation’s better-than-expected first-quarter performance, strong policy stimulus and resilience in exports.

While Barclays recently revised its China gross domestic product (GDP) forecast upward from 4.4% to 5%, the World Bank readjusted its expectations from 4.5% to 4.8%.

China’s economy is on track for a steady rebound and the nation is poised to meet its preset annual growth target of around 5%, experts said.

As the broader economy is still facing pressures from lacklustre demand and mounting external uncertainty, they called for stepped-up fiscal support to boost domestic demand. Deepening reform further is an imperative to deal with some structural issues, they added.

Zhang Xiaoyan, associate dean of Tsinghua University’s PBC School of Finance, told China Daily in an exclusive interview that the country’s around 5% annual GDP target is highly achievable.

The nation still has huge growth potential and favourable conditions, given its ultra-large domestic market, a complete industrial system and abundant talent, Zhang said.

“We’re slowly coming out of the negative shock (of the prolonged lockdowns), and the economy is slowly recovering,” Zhang said, adding that technological innovations, such as artificial intelligence, and green industries will serve as new growth drivers.

Yao Yang, director of the China Centre for Economic Research at Peking University, said the nation’s annual growth target of around 5% is feasible. “The Chinese government needs to take a bigger step to boost demand,” he said, suggesting an increase in government spending.

China has already announced a series of measures to boost demand, including the issuance of one trillion yuan worth of ultra-long-term special treasury bonds this year as well as driving large-scale equipment renewal and trade-in deals for consumer goods.

Last week, the National Development and Reform Commission and four central departments jointly released a document mapping out measures to foster new consumption scenarios in multiple sectors such as tourism, automobiles and electronics.

Daniel Zipser, senior partner at management consultancy McKinsey & Co, said that China’s consumption market “has seen a moderate recovery so far and we anticipate this trend to continue”.

Zipser, who is also head of McKinsey’s consumer and retail practice in Asia, said that China’s growth over the past two decades came from the rise of the middle-income group, and “there is still substantial potential for more urbanisation, more income increases”.

He expressed confidence regarding the nation’s long-term prospects, saying the rise of the middle-income group will continue to drive consumption.

Experts said that China is on the right track in dealing with its real estate troubles, with a series of policy-easing measures recently announced for the property sector.

They expect to see more forceful efforts to digest housing inventories and further deepening of reform to tackle issues hindering the economy’s healthy growth.

Robin Xing, chief China economist at Morgan Stanley, said that China’s policies are moving in the right direction. “Nominal growth is likely to remain steady in 2024 and improve modestly in 2025.”

The housing buyback initiative, if implemented smoothly, could improve developers’ liquidity for housing completion and also effectively increase public-housing provision, Xing said.

 - China Daily