Despite the initial growth, consumption remains tepid, particularly in lower-tier cities where the property sector continues to face difficulties.

Technological advancements, including automation and AI, are also reshaping labor demand, posing challenges for low-skilled jobs and creating instability for informal and temporary workers due to limited job security.

China's economy experienced a notable 5.4 percent year-on-year real GDP growth in the first quarter of 2025, buoyed by policy measures that stimulated consumption and home sales in major cities.

Mara Warwick from the World Bank highlights the critical role of household consumption in sustaining growth amid these economic challenges, advocating for stronger social safety nets to encourage spending.

However, the World Bank's China Economic Update forecasts a slowdown in growth, projecting it to moderate to 4.5 percent in 2025 and further to 4.0 percent in 2026, largely due to global trade restrictions and domestic economic challenges.

Significant risks to China's growth outlook persist, including trade policy uncertainty, weaker global demand, and ongoing struggles in the property sector, which could adversely affect investment and consumption.

In response to these economic pressures, the Chinese government is implementing accommodative monetary and fiscal policies, which include increased infrastructure spending and enhanced social protection benefits.

Elitza Mileva of the World Bank emphasizes that addressing labor market changes necessitates comprehensive macroeconomic policy support and structural reforms, particularly in skills development and social protection.

The labor market is facing its own set of challenges, with only 21 million net new jobs created over the past five years, a stark decline compared to previous years, indicating a weakening correlation between economic growth and job creation.

Additionally, manufacturing investment and exports, which were once robust, are now encountering difficulties due to uncertainties surrounding global trade policies.