IMF to urge China to shift growth model

MD wants it to focus on domestic consumption, rein in local govt debt

WASHINGTON:

The International Monetary Fund plans to tell China to boost weak domestic consumption, address its troubled real estate sector and rein in local government debt, problems that are dragging down both Chinese and global growth, IMF Managing Director Kristalina Georgieva told Reuters.

Georgieva said in an exclusive interview the messages will be delivered to Chinese authorities in a forthcoming IMF “Article IV” review of China’s economic policies. The Fund will strongly urge Beijing to shift its growth model away from debt-fuelled infrastructure investment and real estate, she said.

“Our advice to China is use your policy space in a way that helps you shift your growth model towards more domestic consumption,” Georgieva said. “Because the traditional way of infrastructure, pumping in more money, in this current environment is not going to be productive.”

“Without structural reforms, medium term growth in China can fall below 4%,” Georgieva said.

Published in The Express Tribune, September 17^th, 2023.

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