The International Monetary Fund has upgraded its forecast for China’s economy, while warning that consumer-friendly reforms are needed to sustain…
The International Monetary Fund has upgraded its forecast for China’s economy, while warning that consumer-friendly reforms are needed to sustain strong, high-quality growth.
The IMF report, issued late Tuesday, said the world’s second-largest economy will likely expand at an annual rate of 5% this year, based on its growth in the first quarter and recent measures to support the sector. real estate.
But he warned that achieving sustained growth requires building stronger social safety nets and raising workers’ incomes to allow Chinese consumers to spend more.
The IMF also said Beijing should reduce subsidies and other “distortive” policies that support manufacturing at the expense of other industries such as services.
The ruling Communist Party has set its annual growth target at “around 5%” and the economy grew at a faster-than-expected 5.3% in the first quarter of the year, boosting the global economy.
The IMF said its upgraded forecast also reflects recent measures to boost growth, including new help for the housing industry such as lower interest rates and lower down payment requirements for mortgage loans.
But he said risks remained and growth of 4.5% was forecast in 2025.
The IMF praised the Chinese government’s focus on what it calls “high-quality” growth, including greater investment in clean energy and advanced technology and better regulation of financial industries.
But he added that “a more comprehensive and balanced policy approach would help China weather the headwinds facing the economy.” Job losses, especially during the pandemic, and falling housing prices have hit the finances of many Chinese.
The report echoes the views of many economists who say more must be done to provide a social safety net and raise workers’ incomes so that Chinese families can afford to save less and spend more.
The long-term assessment of the IMF report was less optimistic. He said he expected China’s annual economic growth to fall to 3.3% by 2029 due to its rapidly aging population and slower productivity growth, as well as prolonged difficulties in the real estate sector.
Using industrial policies to support various industries, such as automobile manufacturing and computer chip development, can waste resources and hurt China’s trading partners, he said, alluding to a key point of dispute between Washington and Beijing.
U.S. officials contend that China is providing unfair support to its own industries and creating excess manufacturing capacity that can only be absorbed by exporting what cannot be used or sold domestically.
China rejects that stance, while protesting that the United States and other wealthy nations have invoked false national security concerns to impose unfair restrictions on technology exports to China.
2024 The Keynote USA. Copyright © 2024 Keynote USA News All rights reserved.. This material may not be published, broadcast, rewritten, or redistributed.
Keynote USA
For the Latest Local News, Follow @Keynote USA Local on Twitter.