China – Is the 5% growth target achievable?
The “around 5%” growth target set for this year is once again an ambitious one.
Commerzbank Economic Research
03/17/2025
A growth target of around 5% is being set, again
At the annual meeting of National People’s Congress (NPC) which took place in early March, Chinese policymakers set a growth target of “around 5%” for this year, the third year in a row. However, weak consumption and private sector investment have been under pressure because of the property sector downturn and the lack of private business confidence. Whether the 5% target is achievable boils down to whether domestic demand can turn around this year.
Property sector is still in a downcycle…
China’s real estate troubles have entered the fourth year. China’s property sector, which at its peak accounted for 25% of the economy, has been reduced to around 19.5% of GDP, after factored in both direct (construction and real estate services) and indirect (upstream and downstream) effects.
Encouragingly, thanks to the central and local governments’ property easing measures on mortgages and home purchases, there are emerging signs that property transactions and land sales in major cities are stabilization. Nevertheless, international comparison based on house prices suggests that China’s housing downturn may last for another 4 to 10 quarters. This means the property sector will remain a drag on growth for this year.
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