China has made progress on economic reforms, but more is needed to avoid high corporate debts, said David Lipton, first deputy managing director of the IMF.
China has accomplished much in a number of key areas including liberalizing and opening the economy and financial system reform, said Lipton said during a recent interview with Xinhua in Beijing.
With waning foreign trade, economic rebalancing means transitioning to a more household consumption-oriented economy, he said.
"We have already seen the service sector growing more rapidly than the industrial sector. That's an indication of these changes," he said on the sidelines of seminar "The Shifting Global Economic and Political Landscape: Integration or Fragmentation?"
There is more to do, Lipton said, including reforming unprofitable state-owned enterprises and reducing production of goods with excess supply in the global economy.
"It's also important to avoid vulnerabilities," he said, noting that central and local government debt is on the rise -- though not yet worrying -- and corporate debt is very high with some held by entities with no prospect of ever making a profit.
Following through on rebalancing and limiting vulnerabilities could be the tasks for several years, he said.
Less focus should be put on short-term growth targets to avoid pumping up growth when economic indicators are subpar, he suggested.
More emphasis on medium- to long-term growth targets is probably something China should think of, he said, adding that the economy can continue to grow rapidly through supply-side structural reform.
"It is right for China to focus on the supply-side of the economy, boosting productivity and efficiency of workers, and providing workers with better equipment and technology," he said.