IMF urges China to raise productivity, rebalance economy amid rebound

China's economy is witnessing a strong rebound that will contribute about a third of global growth this year, she said.

IMF’s January forecast puts China’s gross domestic product (GDP) growth at 5.2 per cent this year—a sizeable increase of more than 2 percentage points from the 2022 rate, she said.

Driving this growth is the anticipated rebound of private consumption as the economy has reopened and activity has normalised, she said addressing the China Development Forum 2023 in Beijing yesterday.

China's economic rebound comes at a time when the global economic prospects remain challenging, she said.

“At the same time, market-oriented reforms to level the playing field between the private sector and state-owned enterprises, together with investments in education, would significantly lift the [Chinese] economy’s productive capacity,” she said.

“IMF research shows that productivity-enhancing reforms in China could lift real GDP by as much as 2.5 per cent by 2027, and by around 18 per cent by 2037—growth that would be both higher quality and more inclusive. What’s more, it would also help offset demographic pressures and narrow the gap to advanced economy income levels even faster,” she said.

"For the world economy, however, spring is yet to come," she said, as uncertainties are exceptionally high due to the risks of geo-economic fragmentation and rising financial instability at the time of higher debt levels.

Response actions taken by policymakers in advanced economies have eased market stress to some extent, but uncertainty remains high and underscores the need for vigilance, she added.

Fibre2Fashion News Desk (DS)