"The property market downturn could last longer than expected, weighing on consumer sentiment and spending and adding pressure on upstream suppliers and creditors. This would further squeeze local government revenue and dampen public investment. Externally, the economy is vulnerable to softer global demand due to tighter-than-expected financial conditions and heightened geo-political tensions. Climate change and associated extreme weather events, the frequency of which has increased in recent decades, also pose a downside risk. In contrast, stronger-than-expected policy support and further progress on structural reforms could present upside risks.
China’s growth is projected to slow to 4.5 and 4.3percent in 2024 and 2025, respectively, reflecting short term headwinds but also growing structural constraints to growth, including high levels of debt, population ageing and persistent economic imbalances .
History suggests that a substantial escalation of the conflict could lead to significant oil supply disruptions and soaring energy prices (World Bank 2023a). Higher energy prices would raise production costs for other commodities, particularly energy intensive commodities including some metals and food. Rising trade protectionism represents additional risks, particularly if they constrain China’s imports of critical technology, slow the transfer of productivity-enhancing innovations, and lead to a decoupling of high-tech supply chains.
Climate change and associated extreme weather events, the frequency of which has increased in recent decades, pose a downside risk to the outlook as underscored by damaging heatwaves and floods in China through 2023."
China-Economic-Update-Dec23-EN.pdf (worldbank.org) b.