BEIJING – China’s economy is expected to grow by 6.7 per cent this year and can “safely sustain strong growth” over the medium term, a report by the International Monetary Fund (IMF) said Wednesday, while urging the country to accelerate reform across various sectors.
Between 2018 and 2020, China’s economy is expected to grow by 6.4 per cent annually on average, the IMF concluded at the end of a two-week consultation with China’s top economic and financial officials.
The IMF’s economic projection for China this year exceeds that of the Chinese government, which set an annual economic growth target of about 6.5 per cent.
The generally positive report also comes at a time when China has been fielding concerns from international organizations about its rising debt, which critics say threatens to further slow the economy.
“China has the potential to safely sustain strong growth over the medium term,” David Lipton, IMF’s first deputy managing director, told a press conference in Beijing. “As has been widely recognized, including in the government’s reform plans, this requires deep reforms to transition from the current growth model that relies on credit-fed investment and debt.”
In particular, China needs to switch faster to an economic model reliant on consumption rather than investment; increase the role of market forces; and tackle growing debt in its non-financial sector, Lipton said.
The government should step up efforts to reduce overcapacity in fields such as coal and steel, and tackle the debt-making state-owned enterprises and “zombie” firms, Lipton said.
Last month, Moody’s downgraded China’s sovereign credit rating for the first time since 1989, citing the country’s worsening debt outlook.