IMF urges China to chart new economic course as officials confer with CEOs

IMF urges China: In a meeting attended by senior Chinese government officials and executives from global companies, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva stressed upon the imperative for China to enact innovative economic policies to expedite resolution of its property market crisis and invigorate domestic consumption and productivity.

Georgieva underscored that China stands at a critical juncture, facing a choice between adhering to traditional policies or embracing a transformative approach for achieving high-quality growth. 

While Chinese officials expressed confidence in meeting economic targets, Georgieva's remarks echoed the IMF's call for more reforms to steer towards a consumer-centric policy framework.

Highlighting the potential benefits, Georgieva cited an IMF analysis suggesting that a shift towards consumer-centred policies could inject an additional $3.5 trillion into China's economy over the next 15 years, a major boon equivalent to more than double the size of South Korea's economy.

To realise this potential, Georgieva stressed the necessity for China to take decisive measures, including addressing the challenges posed by unfinished housing projects and local government debt risks.

Stressing the importance of bolstering domestic consumption, Georgieva asserted that empowering individuals and families with increased spending power is paramount.

The IMF's recommendations align with calls from other economists for a revamped growth model in China, addressing structural imbalances and fostering higher returns on investment. 

Georgieva's remarks, delivered at the onset of a two-day meeting, underscored the significance of reshaping China's economic trajectory, particularly amid efforts to bolster foreign investor confidence and portray China as open for business.

Foreign investment inflows into China have experienced a notable decline, prompting intensified efforts by Chinese officials to attract investors. 

Against this backdrop, Apple CEO Tim Cook, a prominent figure at the Beijing event, lauded China's efforts to open up and expressed optimism about the country's economic trajectory.

The China Development Forum, attended by over 100 overseas executives and investors, witnessed discussions aimed at fostering partnerships and exploring investment opportunities. 

In tandem with the IMF's recommendations, China's recent policy initiatives, including expanded market access and investment incentives in science and technology, underscore the nation's commitment to fostering innovation and economic growth.

Premier Li Qiang reaffirmed China's commitment to economic stability and growth, highlighting the previously announced plan to issue ultra-long bonds as a mechanism to stimulate investment and stabilise growth. 

Officials also reiterated President Xi Jinping's vision to drive investment in "new productive forces," encompassing industries such as networked electric vehicles, spaceflight, and advanced drug development.

With Finance Minister Lan Foan expressing confidence in achieving China's economic objectives for the year, the ongoing dialogue between officials and global CEOs signals a concerted effort to navigate challenges and seize opportunities in the evolving global economic landscape.

(With Reuters Inputs)