China beomes focus at IMF/WB annual meetings

Updated 2017-10-16 14:31:54 Xinhua
Maurice Obstfeld, chief economist at the International Monetary Fund (IMF), attends a press briefing at the IMF headquarters in Washington D.C., the United States, on Oct. 10, 2017. (Xinhua/Yin Bogu)

Maurice Obstfeld, chief economist at the International Monetary Fund (IMF), attends a press briefing at the IMF headquarters in Washington D.C., the United States, on Oct. 10, 2017. (Xinhua/Yin Bogu)

From economic growth, financial risks, currency internationalization to the Belt and Road Initiative, China was frequently mentioned by financial officials at the just-concluded annual meetings of the International Monetary Fund (IMF) and the World Bank.

As the world's second-largest economy, China's economic growth, the development of its financial markets, and its agenda of opening up and reform will have a major impact on the global economy and financial markets.

STRONG GROWTH WITH REFORMS

In its latest World Economic Outlook released on Tuesday, the IMF raised its forecast for China's economic growth in 2017 and 2018 to 6.8 percent and 6.5 percent respectively, both 0.1 percentage point higher than the earlier forecast in July.

For an economy with a total volume of over 11 trillion U.S. dollars, maintaining such a high growth is not easy, said Chinese Vice Finance Minister Zhu Guangyao.

China's stable economic growth mainly stems from major progress in economic reforms, particularly supply-side structural measures, and the government's ability to maintain a stable macroeconomic policy, he said.

While gains from structural reforms will come with a time lag, they really have a positive impact on China's economic growth in the medium-term, said Changyong Rhee, director of the Asia Pacific Department at the IMF, adding China's growth has also provided ample opportunities for Asia to maintain its growth over the last ten years.

"If China opens its market more to its neighbors in Asia, to the world, that would really boost up the regional as well as the global growth rate," he said, noting China alone now accounts for 34 percent of global growth.

While China has made "significant progress" in rebalancing from the export sector to domestic demand, China is still relying too much on investment growth, he said, suggesting China build a social safety and boost consumption to move towards more balanced domestic demand-led growth.

FINANCIAL RISKS UNDER CONTROL

Despite the positive revision of China's growth, the IMF has urged the Chinese authorities to intensify efforts to rein in credit expansion and strengthen financial resilience.

"The reform of the SOEs (state-owned enterprises) and the continued reining in of credit in order to control the financial risk in China will be most welcome," IMF's Managing Director Christine Lagarde said Thursday at a press conference.

"In recent years, due to factors such as economic slowdown, structural adjustment, and high volatility in the international financial markets, potential risks in China's financial industry have increased, but in general, the risks are manageable," said Zhou Xiaochuan, governor of the People's Bank of China (PBOC).

"The Chinese government has the capacity and confidence to prevent systemic risks and maintain healthy and stable economic operations," Zhou said Saturday in a statement sent to the International Monetary and Financial Committee (IMFC) meeting.

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