Bank of Finland forecasts China’s growth slowing to 3% in 2028 amid weak domestic demand

The Bank of Finland published its latest BOFIT forecast for China, projecting economic growth of about 4% in 2026, around 3.5% in 2027 and 3% in 2028. Weak domestic demand and a continuing property downturn leave growth reliant on high-tech manufacturing, state-supported investment and exports. The widening imbalance between production capacity and domestic demand is increasing international trade tensions. Declining housing prices, an uncertain labor market and high household saving continue to depress consumption, with limited policy support failing to produce a broad recovery in household spending. A shrinking population and large inventories of unsold or unfinished apartments also make property unlikely to become a major growth driver in coming years. Population aging and an investment-driven growth model yielding diminishing returns and modest productivity gains will further constrain expansion. Exports are expected to keep rising throughout the forecast period, though at a slowing pace, while China’s current account surplus remains large. Substantial subsidies for export industries support production but intensify competitive pressures abroad. Policy continues to prioritize output and technological self-sufficiency, including recently announced support for infrastructure, technology and targeted bank lending. Rising public debt and strained local government finances limit the scope for broad stimulus, while cheaper financing alone cannot resolve weak demand.