IMF Sees China Growth Around 8% In 2012
But First Deputy Managing Director David Lipton said inflation was under control and Beijing had room to support activity in case of a more serious global downturn. China’s growth in 2010 was above 10 percent.
He welcomed a decision by the People’s Bank of China to cut interest rates by 0.25 percent, which “confirmed the authorities’ commitment to achieving their macroeconomic objectives in the face of slowing growth and increased downside risks, especially from Europe.”
Shift toward consumption
The medium-term priority was to shift China’s economy toward a more consumer-based growth model that also aims to address rising inequalities by promoting more inclusive growth. The IMF team was led by Markus Rodlauer. Lipton made these remarks after joining the final policy discussions in Beijing. He met with Chinese Vice Premier Wang Qishan and held in-depth discussions with People’s Bank of China Governor Zhou Xiaochuan, Finance Minister Xie Xuren, and other senior Chinese officials.
“This transformation would substantially boost living standards in China and contribute significantly to strong and balanced global growth,” Lipton told reporters in Beijing.
The IMF supported China’s ongoing effort to promote higher-quality growth while at the same time fine-tuning macroeconomic policies to help ensure that growth does not slow too much. China’s timely and large economic stimulus in 2009–10 had succeeded in supporting domestic growth, shielding China’s population from the worst of the crisis, and helping the global recovery by providing a needed lift to world demand, he said.
“China again has space for a forceful response if necessary,” Lipton added. However, any stimulus should be provided through budgetary measures and geared toward supporting the objective of medium-term rebalancing.
Further reforms needed
In this context, Lipton argued for a package of reforms “to achieve quality growth that relies less on investment, more on consumption, and is environmentally friendly.”
This package would include measures to raise household income, liberalize the financial system, strengthen social security while also lowering social contribution rates, further appreciate the exchange rate, and increase the cost of various inputs to production...
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