Japan Center for Economic Research: "China's Growth Rate to Average 4.1% Over Next Five Years"

Impact of Domestic Demand Stagnation and Deflation
Growth Rate to Drop Further If Punitive Tariffs Are Imposed
Nominal GDP Per Capita to Rise 7% Year-on-Year

The Japan Center for Economic Research projected on December 16 that China's average annual economic growth rate over the next five years (2026-2030) will decline to around 4.1%. The center analyzed that domestic demand stagnation and deflation will drag down economic growth.

According to the Nihon Keizai Shimbun on this day, the Japan Center for Economic Research released its “Economic Outlook to 2040.”

The center forecast that China's average annual economic growth rate for the next five years (2026-2030) will be 4.1%. This figure is significantly lower than the 5.4% growth rate recorded in the previous five years (2021-2025).

By year, the center expects the growth rate to slow to 4.9% in 2025, 4.5% in 2026, and 4.4% in 2027. In particular, it forecasts that the rate will fall further to around 3.9-4.0% in 2029, and drop to 3.8% in 2030.

Previously, the Communist Party of China released a draft of the “15th Five-Year Plan,” which outlines the country’s economic development strategy for the next five years (2026-2030). The draft did not specify any concrete economic growth targets. This is interpreted as a result of prolonged domestic demand stagnation due to the real estate downturn and the difficulty of achieving higher growth, making it challenging to set a numerical target.

The Japan Center for Economic Research has become increasingly pessimistic about China’s economic growth rate as time goes on. It analyzed that the average growth rate will fall to 3.5% for 2031-2035 and to 2.8% for 2036-2040. The center explained that as the population declines rapidly, labor productivity will decrease and growth momentum will weaken.

In particular, the center assessed that if the punitive tariffs mentioned by the Trump administration in April are implemented, China’s economic growth rate will decline even more sharply. If the United States imposes a 145% reciprocal tariff on China, China’s growth rate is expected to fall to 4.2% in 2026.

China’s nominal GDP per capita in 2026 is expected to increase by 7% year-on-year to 14,740 dollars (about 2.28 million yen). This surpasses the World Bank’s threshold for “high-income countries,” which is set at 13,936 dollars or higher based on gross national income (GNI) per capita.

However, the Japan Center for Economic Research analyzed that due to future uncertainties, Chinese households are expected to maintain a strong tendency to save, and intensified price competition among companies will increase deflationary pressures.