IMF chief urges China to boost growth with 'pro-market reforms'

BEIJING: The head of the International Monetary Fund on Sunday called on China to implement “a comprehensive package of pro-market reforms” to boost a sluggish economy beset by a housing market crisis, low domestic demand and persistently high youth unemployment.

Chinese policymakers have so far resisted calls to juice the economy through massive government stimulus, instead stressing the need to pivot towards “high-quality” growth.

Speaking at the China Development Forum in Beijing on Sunday, IMF managing director Kristalina Georgieva said the “transition from high rates to high quality of growth is the right fork in the road to take and China is determined to do so”.

The Bulgarian economist warned that “this transformation would not be easy”, but argued that “with a comprehensive package of pro-market reforms, China could grow considerably faster than a status quo scenario”, according to an official transcript of her speech.

Beijing should take “decisive steps” to reduce the amount of unfinished housing and give more space for “market-based corrections” in the crucial but heavily indebted real-estate sector, Georgieva said.

Authorities should also boost “the spending power of individuals and families” by beefing up China’s pension system and taking other steps to hone its vast social security apparatus, she added.

Georgieva also pushed China to strengthen “the business environment and (ensure) a level playing field between private and state-owned enterprises”, a long-standing demand of overseas business groups operating in the Asian nation.

Top Chinese politicians have been outwardly bullish on the economy, with Premier Li Qiang telling Sunday’s forum that Beijing would “take practical, effective actions to promote high-quality development and inject positive energy… into the global economic recovery”.

But GDP growth rates in China have been trending downward for years, and Beijing this month set an annual target of “around five percent” — significantly lower than the breakneck expansion rates that powered the country’s meteoric rise to prosperity.

Sunday’s forum was attended by some of the world’s highest-profile business figures, including Apple’s Tim Cook.