IMF chief urges China to rebalance economy towards consumption

BEIJING – The head of the International Monetary Fund (IMF) struck a positive note on China’s outlook, describing it as one of the “green shoots” in the world economy and urging the authorities to rebalance the economy towards consumption.

IMF managing director Kristalina Georgieva said the “strong rebound” in China’s economy is important not only for itself, but for the world.

“The robust rebound means China is set to account for around one-third of global growth in 2023 – giving a welcome lift to the world economy,” Ms Georgieva said in prepared remarks to the China Development Forum in Beijing on Sunday.

The IMF’s January forecast for China puts GDP growth at 5.2 per cent in 2023, an increase of more than 2 percentage points from the 2022 rate, and driven by the anticipated rebound of private consumption as the economy reopened and activity normalised, she said. 

Ms Georgieva urged China to take measures to

raise productivity and rebalance its economy

away from investment and towards more consumption-driven growth that she said is more durable, less reliant on debt, and will help address climate challenges.

A rebalancing of China’s economy could also lead to a 15 per cent reduction in carbon dioxide emissions over the next three decades. 

“Again, this translates into benefits for the whole world: a fall in global emissions of 4.5 per cent over the same period,” she said.

At the forum, Chinese Vice-Premier Ding Xuexiang used a speech to global executives to reassure participants that China would continue to open up as international companies increasingly complain of market-access challenges.

“Opening to the outside world is a national policy; it is a mark of modern China,” Mr Ding said on Sunday during the keynote speech.

He also read a message from President Xi Jinping, in which the Chinese leader pledged to continue to pursue a mutually beneficial opening-up.

China’s opening-up after Covid-19 and its strong economic recovery will offer “triple” benefits for United States business communities despite “chilly” relations between the two countries, Foreign Minister Qin Gang told American business leaders including Apple chief executive Tim Cook and Boeing International president Brendan Nelson, who were also at the forum.

The fact that

President Xi was re-elected,

the nation’s continued efforts to

open up to the world

and its social and economic “reset” will benefit US business communities, Mr Qin said in the meeting on Saturday in Beijing, according to a statement posted on China’s Foreign Ministry website. 

Still, relations between China and the US are as “chilly” as early spring weather, the minister said.

Mr Qin welcomed US companies to keep expanding investments in China and to set roots in the country, according to the statement.

Beijing hopes the US can help promote bilateral relations despite current difficulties and restore ties to a healthy and stable trajectory, he said. 

US representatives said China-US relations are at a critical stage and the business communities are committed to preventing the two countries from stepping into a trap of isolation and conflict.

They said they welcome more face-to-face communications and hope more China-US flights could be added to facilitate exchanges, according to the statement. 

BLOOMBERG