China’s economic recovery is gaining traction but remains uneven as the world’s second-largest economy transitions toward “high-quality growth,” the ASEAN+3 Macroeconomic Research Office (AMRO) said in its latest assessment.

AMRO projects China’s GDP to expand by 4.8 percent in 2025 and 4.4 percent in 2026, supported by fiscal stimulus and resilient exports. However, domestic demand continues to face pressure from the real estate slowdown and weak consumer confidence.

“China’s post-COVID recovery has taken on a two-speed trajectory, with emerging sectors gaining momentum while traditional growth engines [remain] subdued,” said AMRO Lead Economist Jae Young Lee. “Sustained growth will require addressing legacy issues and boosting household incomes.”

The report also noted that inflation remains flat, with the consumer price index (CPI) expected at 0.0 percent in 2025 and 0.4 percent in 2026, reflecting weak demand and intense competition.

AMRO warned that China’s growth path is vulnerable to both domestic challenges—including the property downturn, local government debt, and an aging population—and external risks, such as U.S. trade restrictions and global protectionism.

“The balance of near-term risks is tilted to the downside,” AMRO said, adding that a faster resolution of real estate and fiscal issues could lift activity beyond expectations.

China’s ongoing trade and technology tensions with the United States have also reshaped supply chains across Asia. Heightened export controls, tariffs, and restrictions on Chinese technology firms have pushed Beijing to rely more on domestic innovation and regional markets—an adjustment that has mixed effects for neighboring economies like the Philippines.

China remains one of the Philippines’ largest trading partners, accounting for about 20 percent of total exports and imports, making its economic shifts highly consequential for local industries. A slowdown in China could dampen demand for Philippine goods such as electronics, minerals, and agricultural products, while potential trade disruptions may raise input costs for manufacturers.

However, China’s pivot toward green technology, digital transformation, and consumer-driven growth also opens opportunities for Philippine investors and exporters in renewable energy, agrifood, and services, with a weaker yuan possibly making Chinese imports more affordable and easing inflationary pressures.

AMRO urged China to maintain expansionary fiscal and monetary policies to sustain growth, while deepening financial reforms and encouraging private sector investment. “A successful growth transition,” it said, “will require stronger coordination between central and local governments and a focus on inclusive, sustainable development.”