The International Monetary Fund (IMF) has raised its forecast for China’s economic growth, anticipating a 5% increase in 2024 and a 4.5% rise in 2025, up from previous estimates of 4.6% and 4.1%, respectively. This adjustment follows China’s stronger-than-expected first-quarter growth and new policy initiatives aimed at economic stimulus. Despite the uplifted forecast, the IMF urged China to reduce its focus on industrial policies that support “priority sectors” and instead boost domestic consumption.

China’s economy faces ongoing challenges, particularly in the housing market, which has experienced a severe slump, but robust exports and factory investments continue to drive growth. The US and EU have expressed concerns that low-cost imports from China, especially in sectors like electric vehicles and renewable energy, could impact their automotive industries.

In response, the US has raised tariffs on Chinese electric vehicles, while the EU is concluding an anti-subsidy investigation. China has rejected accusations of overcapacity and subsidies, accusing the US of attempting to restrain its growth through trade measures and labeling EU actions as protectionist.

The IMF’s recommendations include strengthening the social safety net, liberalizing the services sector, and addressing the housing market’s issues through comprehensive measures to stimulate domestic spending. However, Chinese President Xi Jinping remains cautious about increasing social spending, focusing instead on maintaining economic productivity.