China has made progress on reforms but should allow market forces to play a more decisive role and accelerate its opening up to the rest of the world, the International Monetary Fund said.
While credit growth has slowed, it remains too fast, and policy makers should de-emphasize growth targets and focus on higher-quality growth, the fund said in a statement released yesterday in Beijing at the conclusion of its mission for the 2018 Article IV Consultation.
Embracing market forces means reducing public sector dominance over many industries, opening markets to the private sector, and ensuring competition, the fund said, adding that the trade and investment remain restrictive. The fund’s recommendations chime with the criticisms that the Trump administration has leveled at Beijing in the course of the current trade dispute.
“Faster opening up would not only support China’s own high-quality growth agenda, but also benefit the global economy,” the IMF said in the statement. “Recent efforts to defuse trade tensions are welcome and efforts should continue to seek a negotiated settlement that strengthens the global economy.”
The comments came hours after U.S. President Donald Trump saying he’ll move ahead with tariffs on $50 billion of Chinese imports, and ahead of Commerce Secretary Wilbur Ross’s return to Beijing this week for more talks from June 2. The IMF encouraged all sides to ease trade tensions and strengthen multilateral trade and investment.
The IMF’s senior resident representative for China, Alfred Schipke, told reporters at a briefing that rising protectionism is a risk and unilateral actions can be counterproductive. He added that the country’s further opening of its financial sector should be gradual.
China’s economic expansion will likely slow to 6.6 percent this year and to about 5.5 percent by 2023, according to the IMF. Economists surveyed by Bloomberg project 6.5 percent growth this year. Reforms have made progress in safeguarding the financial sector, slowing credit growth, reducing overcapacity, cutting pollution and opening up the economy, the fund said. Bloomberg
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