China’s economic conditions deteriorated over the summer on sluggish exports, a nosediving real estate sector and an unimpressive pick-up in consumer spending. The government has announced a number of minor stabilisation measures in recent months sufficient to sustain GDP growth of about 5 % in 2023.

“China’s economy is entering a lower-growth era due to underlying structural factors,” reports BOFIT senior economist Juuso Kaaresvirta.

With economic growth over the medium term dampened by structural factors, we now expect growth to slow to 4 % next year and 3 % in 2025. China is dealing with a rapidly ageing population and a shrinking working-age cohort. Moreover, the government has made marginal progress in shifting away from a growth paradigm driven by fixed investment to a consumption-based model and overall productivity growth remains tepid. China is unlikely to make needed major structural reforms during the forecast period. The leadership remains focused on promoting self-sufficiency, national security and party ideology – all factors that determine economic policymaking.

The government has limited policy space for stimulus. It has run large general government deficits for years, and debt has ballooned. The government remains cautious on implementing more accommodative monetary policies due to already large capital outflows. Moreover, uncertainties, especially those related to the geopolitical situation, could have major impacts on the outlook. Financial sector risks also continue to mount.

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Senior Economist Juuso Kaaresvirta
tel. +358 9 183 2107 / juuso.kaaresvirta(at)

Head of BOFIT Iikka Korhonen
tel. +358 9 183 2272 / iikka.korhonen(at)