March 26, 2023 at 22:17 PM
IMF Managing Director Kristalina Georgieva
[First Finance and Economics]The IMF recommends that China increase productivity and promote economic rebalancing. Kristalina Georgieva (Kristalina Georgieva), managing director of the International Monetary Fund (IMF), said at the 2023 China Development Forum on the 26th that China’s economy is recovering strongly. The growth rate of China’s GDP will reach 5.2%, a significant increase of 2 percentage points compared to 2022.
“The main reason driving this growth is that private consumption is expected to rebound quickly as the reopening and economic activities return to normal.” In her view, “This is very important to China, and it is also of great significance to the world. The growth of the Chinese economy A strong rebound means it will contribute about one-third of global economic growth in 2023, which will provide a welcome boost to the world economy.”
The IMF’s analysis also shows that every 1 percentage point increase in China’s GDP growth rate will increase the average GDP growth rate of other Asian economies by 0.3 percentage points.
However, China still faces a severe external situation. The current global economic and financial environment fluctuates continuously. The IMF predicts that 2023 will be another difficult year for the global economy – the global economic growth rate is expected slowed down to below 3%. The outlook for 2024 is expected to improve, but even so, global growth will remain well below the historical average of 3.8%.
The IMF also makes recommendations for China’s policymaking. Georgieva highlighted two opportunities – the first to boost productivity and rebalance the economy away from investment-led growth to more consumption-led growth. This growth is more sustainable, less dependent on debt, and helps address the climate challenge. To achieve this goal, the social security system needs to play an important role. Health care and unemployment insurance benefits should continue to increase to provide households with a buffer against shocks. In addition, market-oriented reforms should create a level playing field between the private sector and state-owned enterprises, while strengthening investment in education, which will greatly increase the productivity of the economy.
IMF research shows that if China can implement these reforms, its real GDP will increase by an additional 2.5% by 2027 and by about 18% by 2037. Moreover, the quality of this economic growth is higher and more inclusive. It would also help offset demographic pressures and narrow China’s income gap with advanced economies more quickly.
The second opportunity is green growth. The IMF said it welcomes China’s goal of achieving net-zero emissions by 2060. Like many countries, China is vulnerable to extreme weather events. Last year’s severe drought, for example, led to a drop in hydropower generation, putting pressure on the power sector.
“More importantly, China’s temperature is rising faster than the global average. Therefore, China’s economic growth is facing greater risks. If global warming is not mitigated, China’s GDP may suffer losses as early as 2030 by a magnitude of Estimates will be 0.5% to 2.3%,” she said.