China's economic activity picks up for 2023

The Word Bank has revised up its forecast for China's economic growth this year and next from its October estimates, expecting the world's second-largest economy to grow by 5.2 percent in 2023 and 4.5 percent in 2024.

In its China Economic Update published on Thursday, the World Bank made such projections, which were both up by 0.1 percentage point from its forecasts in the East Asia and the Pacific Economic Update released in October.

The latest China Economic Update report said economic activity in China has picked up this year, driven by increased demand for services, resilient manufacturing investment and public infrastructure stimulus.

However, China's economic outlook is clouded by continued weakness in the real estate sector and tepid global demand in the short term, as well as structural constraints to growth, including high debt levels and population aging.

Sustained policy support and deeper structural reforms are needed to hedge against the headwinds, the report said, adding that deeper reforms of the intergovernmental fiscal system are necessary to tackle the local government financing vehicle debt problem.

Shifting a larger share of stimulus financing measures to the national government would expand fiscal space, with China's recently adopted fiscal budget amendment for 2023 a welcome development in this regard, the report said.