The World Bank’s decision to raise China’s 2025 growth forecast to 4.8% is already resonating in equity and bond markets, with investors interpreting it as a sign of underlying resilience in the world’s second-largest economy.
The upgraded outlook has buoyed sentiment toward China equity and local bond markets, with capital flows increasingly tilting toward China as global growth remains sluggish. Still, the Bank’s warning that growth will slow to 4.2% in 2026 tempers enthusiasm.
Trade and export headwinds were cited as key risks. Elevated trade barriers and policy uncertainty could weigh heavily on markets sensitive to global cycles.
Regional peers are seeing just modest upgrades: East Asia & Pacific growth is raised to 4.4% for 2025, with 2026 projected at 4.5%. But markets are watching whether China’s upgrade will lead to broader capital rotation across Asia.
Market analysts suggest that China’s asset classes remain underappreciated — valuations reflect caution rather than conviction. Should stimulus prove effective and reforms gain traction, the upgrade may mark the start of renewed investor rotation into China.
Still, uncertainty abounds: weak exports, global growth fragility, and fiscal constraints create a narrow path forward. For now, markets are treading cautiously but with renewed respect for China’s rebound potential.
