China's economy projected to grow by 5% in 2024, 4.5% in 2025: IMF

That forecast reflects an upward revision of 0.4 percentage point, compared with the IMF's World Economic Outlook 2024 projections released in April.

For next year, the world's second-largest economy is expected to grow at 4.5 per cent, also a 0.4 percentage point-higher revision, the IMF team said in its preliminary findings.

The trip to Chinawas led by Sonali Jain-Chandra, IMF's China mission chief.

"China's economic development over the past few decades has been remarkable, driven by market-oriented reforms, trade liberalization and integration into global supply chains," IMF first deputy managing director Gita Gopinath said in a statement.

Gopinath joined the policy discussions and met with Chinese government and banking officials during the consultation.

She said that China's achievements have been accompanied by "imbalances and rising vulnerabilities", and headwinds to growth have emerged.

"Recognizing these challenges, the authorities have focused on achieving high-quality growth by supporting innovation, especially in green and high-tech sectors, upgrading financial sector regulations and introducing some policies to mitigate property and local government risks," she said.

However, a more comprehensive and balanced policy approach would help China navigate headwinds facing the economy, she added.

The IMF noted that China's inflation is expected to rise, but stay low as output remains below potential, with core inflation increasing only gradually to average 1 per cent in 2024.

Over the medium term, growth is expected to decelerate to 3.3 per cent by 2029 due to aging and slower productivity growth, it noted.

The risks to growth are tilted to the downside, including a greater or longer-than-expected property sector adjustment and increasing fragmentation pressures, the statement said.

Gopinath said that the ongoing housing market correction, which is necessary for steering the sector toward a more sustainable path, should continue.

The IMF statement also noted China’s ‘significant’ fiscal challenges, especially for local governments.

Key priorities include rebalancing the economy toward consumption by strengthening the social safety net and liberalizing the services sector to enable it to boost growth potential and create jobs, according to Gopinath.

Domestic consumption contributed 73.7 percent to China's economic growth in the first quarter this year, which expanded overall by 5.3 per cent year on year, following 5.2-per cent GDP growth recorded in the fourth quarter last year, according to data from the National Bureau of Statistics.

Fibre2Fashion News Desk (DS)