IMF to urge China to shift growth model towards consumption, Georgieva
says
Send a link to a friend
[September 16, 2023] By
Andrea Shalal and David Lawder
WASHINGTON (Reuters) -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-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.
![](http://archives.lincolndailynews.com/2023/Sep/16/images/ads/current/ldn_sda_NILA_012823.png)
"We actually project that without structural reforms, medium term growth
in China can fall below 4%," Georgieva said.
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.
![](http://archives.lincolndailynews.com/2023/Sep/16/images/ads/current/charrons_bch_2022.png)
[to top of second column] |
![](../images/091623PIX/busine57.jpg)
The International Monetary Fund (IMF) logo is seen outside the
headquarters building in Washington, U.S., September 4, 2018.
REUTERS/Yuri Gripas/File Photo
![](http://archives.lincolndailynews.com/2023/Sep/16/images/ads/current/lincolnheating_lda_FHG_2023.png)
ANEMIC GLOBAL GROWTH
The IMF is preparing to issue a new set of global growth forecasts
ahead of IMF and World Bank annual meetings Oct. 9-15. Georgieva
said separately the institutions would decide on Monday whether to
proceed with the meetings in earthquake-hit Morocco.
The new forecasts are expected to reflect concerns about anemic GDP
growth around the world, as most large economies are still lagging
pre-pandemic growth rates.
The United States is the only large economy to have recovered
pre-pandemic growth, while China is four percentage points below
pre-pandemic trends, Europe down two percentage points and the world
down three percentage points.
With China generating about a third of global growth this year, its
growth rate "matters to Asia, and it matters to the rest of the
world," Georgieva said.
Asked about U.S. Commerce Secretary Gina Raimondo's recent comment
that some U.S. firms viewed China as "uninvestible", Georgieva said:
"There is some outflow from China. It is a trend that we need to
carefully monitor, how it evolves over time."
She added there were some areas - including digital economy and
green technologies - that remained attractive for investors.
She cautioned it was important to ensure China's big push on
electric vehicles was not done using subsidies in a way that created
unfair competition.
(Reporting by Andrea Shalal and David Lawder; Editing by Chris Reese
and Tom Hogue)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |