IMF to urge China to shift growth model towards consumption, Kristalina Georgieva says
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-fueled 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.»
China's aging population and falling productivity were playing a «suppressing role» in its growth rate, along with companies in the United States and Europe shifting supply chains away from China. China's problems in the real estate sector have also caused consumers to rein in spending, Georgieva said.
«We actually project that without structural reforms, medium term growth in China can fall below 4%,» Georgieva said.
IMF says global debt fell as share of GDP in 2022, may resume rising trend
The IMF in July forecast China's 2023 growth rate at 5.2% and 4.5% in 2024, but warned it could be lower given the contraction in real estate.
Georgieva also said it was important for China to address consumer confidence in its real estate sector by financing the completion of apartments that buyers have already paid for, rather than bailing out troubled developers.
ANEMIC GLOBAL GROWTH
The IMF is preparing to
