The International Monetary Fund (IMF) released an update to the World Economic Outlook report on July 8, predicting that the world economy will grow by 3 per cent in 2026, 0.1 percentage points lower than the April forecast. It is reported that this is also the IMF's second cut of this year's world economic growth forecast after a 0.2 percentage point cut in April this year, reflecting the impact of the war in the Middle East, while China is one of the few major economies whose growth expectations have been raised to 4.6 per cent.

Relevant Chinese experts said that this once again shows that the resilience of China's economy and the momentum of industrial upgrading are stronger than previous estimates. China's economy is an important stabilizer for the development of the world economy and an important supporting force for the global industrial chain and supply chain. Some Spanish media recently published an article saying that China's economy has been deeply integrated into the global system, and its related decisions and measures have a far-reaching global impact.

The International Monetary Fund headquarters in Washington, D. C. (April 2024). 

IMF: China's economic performance exceeds expectations

The IMF said in the report that the slight reduction in world economic growth reflects the impact of the war in the Middle East, but thanks to the development and application of artificial intelligence (AI), demand-driven growth in the global science and technology sector is accelerating, offsetting the negative impact of the war to some extent.

IMF believes that the world economic outlook is still facing the risk of a downward trend. If the war in the Middle East breaks out again, it may aggravate the fluctuation of commodity prices, further threaten the security of supply chain, push up prices, and put pressure on the financial environment, and "trade fragmentation" may also accelerate.

The US "New York Times" said that the IMF's forecast reflects the destructive cost of the United States and Israel's decision to attack Iran. This week's situation in the Middle East has raised doubts about the durability of the memorandum of understanding between the United States and Iraq.

"If conflict breaks out again in the region, the global economy will be in a worse situation than last time," Deniz igan, head of world economics at the IMF's research department, told Reuters."

Yu Xiang, an economic scholar at the Institute of American Studies of the Chinese Academy of Social Sciences, said in an interview with China's Global Times on July 9 that the IMF believes that the global economy has not fallen into a significant recession, but the growth foundation is not solid, lower than the average level of the past two years. The direct reason for this reduction is that the war in the Middle East has pushed up energy, food and transportation costs, increased inflationary pressures, and made it more difficult for monetary policy to shift to easing; at the same time, trade fragmentation, tariff drag, supply chain restructuring and policy uncertainty are still inhibiting investment and trade.

According to the IMF's latest forecast, developed economies will grow by 1.7 this year, and emerging market and developing economies will grow by 3.8, both 0.1 percentage points lower than previously expected.

Specifically, the IMF has lowered its growth forecast for the Middle East and Central Asia by 1.2 percentage points to 0.7%, reduced the euro area’s projection by 0.2 percentage points to 0.9%, kept the U.S. estimate unchanged at 2.3%, and raised China’s forecast by 0.2 percentage points to 4.6%.

According to Reuters, the IMF raised the economic growth expectations of some energy exporting countries and countries with close ties to the technology industry, while those economies that rely on commodity imports and are difficult to benefit from AI development have generally lowered their growth expectations.

"The growth trends of different types of economies are clearly differentiated." Yu Xiang analysis said that the overall low growth of developed economies. The overall growth rate of emerging markets and developing economies is still higher than that of developed economies, but the internal differentiation is also obvious. Economies that are deeply embedded in the global technology value chain have benefited relatively, and economies with higher dependence on energy imports, limited policy space, and strong dependence on tourism are facing greater pressure.

Against the backdrop of an overall downward revision of world economic growth expectations, China is one of the few major economies whose growth expectations have been raised.

The IMF report said that China's economic performance exceeded expectations, mainly because China's high-tech manufacturing industry performed well, and related exports strongly boosted the economy.

Zhou Mi, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce of China, said in an interview with China's "Global Times" on July 9 that the main reason for the IMF to raise China's economic growth forecast is that the actual performance of the Chinese economy is brilliant. The economic growth in the first quarter shows that China is capable of achieving its annual economic growth target. The steady growth of China's trade has also brought more confidence to all parties. In the eyes of the outside world, linking China means linking more certainty. At the same time, China's strong innovation momentum can bring new space for economic growth and help promote the further expansion of international economic and trade cooperation in the field of innovation.

The picture shows the foreign trade container terminal of Qingdao Port in Shandong Province, China (2025 data map).

China has been building resilience

According to the latest China Economic Bulletin released by the World Bank on July 7, China's economic growth this year has started steadily and has generally remained resilient. Strong export performance and high-tech investment have played a positive role.

According to the above report, in the first five months of this year, driven by strong demand related to artificial intelligence at home and abroad, China's high-tech sector investment increased by 4.5 year-on-year, and high-tech manufacturing exports increased by nearly 31% year-on-year.

The report also said that the recent energy supply shock has pushed up costs and exacerbated uncertainty, but China's huge oil reserves, diversified import channels, high proportion of renewable energy and high popularity of electric vehicles have helped mitigate the impact.

Since the outbreak of the US-Israeli-Iraq war at the end of February this year, China's resilience in the global energy crisis has continued to attract widespread attention.

According to a recent report by the British "Guardian", a report by the geopolitical consulting firm Asia Group stated that China has withstood the storm of the global commodity crisis. The country has maintained a strategic reserve for a long time and has made great efforts to build renewable energy infrastructure in recent years.

According to data released by the German Solar Energy Association, China's new solar energy installed capacity will exceed 300 GW in 2025, which is more than the total installed capacity of other major solar energy markets in the world.

At the same time, China dominates the global supply chain for solar and other clean technologies. In May, China exported 446000 new energy vehicles, up 1.1 times year on year. From January to April this year, China's cumulative export volume of photovoltaic products increased by about 43% year-on-year.

Pan Jinming, director of the Institute of internationalization and ASEAN at the International Islamic University of Malaysia, wrote earlier this year that China's long-term emphasis on energy security has made it more resistant to external shocks. China has a strategic vision and is prepared before a crisis occurs. Many countries talk about resilience, and China has been building resilience.

Mark Griffin, a professor at the Swiss International School of Management and Development, previously wrote in Hong Kong's South China Morning Post that over the decades, China has built a dense industrial ecology and a solid industrial foundation. this has become a strong support for the Chinese economy to cope with all kinds of risks and challenges. China's economic resilience is based on the role played by many previous layouts.

The Spanish "Review" news website recently published an article that China's economic influence is demonstrated through manufacturing, global supply chains, infrastructure investment, international financial industries, and trade in technology products. China's economic initiatives have global implications.

Yu Xiang, an economic scholar at the Institute of American Studies of the Chinese Academy of Social Sciences, said that China's economy is an important supporting force for the global industrial chain supply chain, and its high-tech manufacturing and exports remain resilient, providing important support for the global technology cycle, manufacturing support and commodity supply. At the same time, the Chinese economy is an important source of global demand and structural transformation. China's expansion of domestic demand, promotion of industrial upgrading, development of green technology and digital economy not only continue to provide the world with manufacturing capacity, but also provide new growth space for global trade, investment and technological development.

The picture shows a farmer's market in Nanning, the capital of China's Guangxi Zhuang Autonomous Region, where local residents are shopping for vegetables. 

In the first half of the year, China's CPI rebounded moderately and steadily.

On July 9, China's National Bureau of Statistics released China's price data for the first half of the year, which provided an important window for the outside world to observe China's economic performance. In the first half of the year, China's consumer price index (CPI) rose 1.0 per cent year-on-year, the core CPI excluding food and energy prices rose 1.2 per cent year-on-year, and the producer price index (PPI) for industrial producers rose 1.5 per cent year-on-year.

"Since the beginning of this year, consumer prices have continued the trend of moderate recovery since the fourth quarter of last year. CPI has maintained a moderate increase range of 1% and above for five consecutive months year-on-year. Whether it is CPI or core CPI, the operation is relatively stable and the rise is moderate." Liu Fang, a researcher at the Market and Price Research Institute of China's National Development and Reform Commission, said.

In terms of PPI, since the beginning of this year, under the combined effect of international and domestic factors, industrial product prices have continued the gradual rebound since the second half of last year. In the first half of the year, China's PPI rose by 1.5 year-on-year.

Xu Guangjian, vice president of the China Price Association, said that since the beginning of this year, affected by the price fluctuations of international crude oil and other commodities, the prices of domestic upstream products such as oil, natural gas, coal and chemical raw materials have risen significantly, which has become one of the factors driving the rebound of PPI. At the same time, the optimization and upgrading of China's domestic industrial structure also provided endogenous support for the recovery of PPI.

In June, the year-on-year increase in PPI further expanded to 4.1 per cent. The US CNBC website stated on July 9 that China's manufacturing activities expanded faster than expected in June. Experts pointed out that external demand, including artificial intelligence-related technology products, is the main factor driving this growth momentum.

"In the next stage, the international environment is still complicated, but the supply of important livelihood commodities in China is sufficient, the connection between production, transportation and marketing is relatively smooth, the policy system of maintaining supply and price stability is constantly improved, the ability of price monitoring, early warning and emergency regulation and control is enhanced, and there are more favorable conditions for maintaining the stable operation of prices, and consumer prices are expected to maintain a moderate upward trend." Wang Guanhua, spokesman for China's National Bureau of Statistics, said.