IMF Executive Board Concludes 2025 Article IV Consultation with China
IMF News, February 18, 2026
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- Published: February 18, 2026
Overview
- The Executive Board concluded the Article IV Consultation with the People’s Republic of China on February 13, 2026. The authorities consented to publication of the Staff Report prepared for the consultation.
- Press Release No. 26/053; date on page: February 18, 2026.
2025 Economic Performance — Key Findings
- Real GDP growth in 2025: 5 percent (meeting the authorities’ target).
- Headline consumer price inflation in 2025 (average): 0 percent.
- GDP deflator: continued to decline in 2025.
- Exports: described as robust, contributing to resilience.
- Current account balance in 2025: an estimated 3.3 percent of GDP (driven by strong exports and real exchange rate depreciation).
- Private domestic demand: described as lackluster.
- Deflationary pressures: noted as persistent.
Outlook and Projections
- GDP growth projection for 2026: 4.5 percent (projected slowdown reflecting prolonged effects of tariffs and trade policy uncertainty).
- Inflation outlook: projected to rise only gradually amid continued economic slack; deflationary pressures expected to persist.
- Medium-term projection: continued deceleration in growth due to a declining labor force, decreasing returns to investment, and slower productivity growth.
- Upside and downside scenario framing:
- Downside risks: deeper-than-expected contraction in the property sector; renewed escalation of trade tensions.
- Upside risks: additional policy stimulus; cooperative resolution of trade tensions.
Executive Board Assessment — Main Conclusions
- Commendation: Directors commended China’s economic resilience despite multiple shocks.
- Structural concerns: Growth model faces mounting challenges from domestic and external imbalances; potential growth expected to slow over the medium term amid aging and subdued productivity.
- Overarching priority: Transitioning to a consumption-led growth model; welcomed 15th Five-Year Plan focus on boosting consumption.
- Macro policy stance: Directors recommended a comprehensive and more forceful response combining increased macroeconomic policy support with structural reforms.
Policy Recommendations (macroeconomic and fiscal)
- Adopt more expansionary macroeconomic policies with a focus on fiscal stimulus until deflationary pressures subside durably.
- Maintain expansionary stance following fiscal expansion in 2025.
- Shift composition of spending toward greater support for consumption and the property sector and away from inefficient investment.
- Include further monetary easing and greater exchange rate flexibility as part of the policy mix.
- Ensure long-term debt sustainability by significant fiscal consolidation only after durable reflation; consolidation should focus on reducing off-budget investment and unwarranted industrial policy support, and include tax and social security reforms.
- Restructure unsustainable LGFV debt through insolvency frameworks while carefully addressing financial sector spillovers and upgrading fiscal frameworks to prevent future debt buildup.
Policy Recommendations (structural, financial sector, and institutional)
- Facilitate property sector adjustment, including central government financing for tackling pre-sold unfinished housing to rebuild consumer confidence.
- Strengthen social protection to lower precautionary savings and support consumption.
- Clarify the “anti-involution” strategy and accompany it with stronger incentives to reduce overinvestment by local governments.
- Scale back unwarranted industrial policy to lower domestic factor misallocation, reduce fiscal costs, and mitigate international spillovers.
- Promote timely and transparent loss recognition in the financial sector, transition to market-based pricing, and prepare a comprehensive strategy to address vulnerabilities, particularly legacy assets such as LGFV debt.
- Improve systemic risk analysis, enhance financial sector oversight, and upgrade crisis management and bank resolution frameworks.
- Advance market-oriented corporate sector reforms, open up the services sector, and foster competitive neutrality across firms.
- Harness artificial intelligence potential while mitigating risks.
- Note scope for further increases in retirement age beyond the announced increase to mitigate aging pressures.
- Improve data quality and transparency to enhance policymaking and surveillance.
Selected Economic Indicators — Notable Exact Figures and Series (2025, projections and trends)
- Real GDP growth: 2024: 5.4; 2025: 5.0; 2026: 4.5; 2027: 4.0; 2028: 3.9; 2029: 3.7; 2030: 3.4 (annual percentage change).
- Total domestic demand 2025: 3.6 (annual percentage change).
- Net exports (contribution) 2025: 1.6.
- Total capital formation (percent of GDP): 2025: 38.8; 2026: 38.4; 2027: 38.7; 2028: 39.0; 2029: 39.1.
- Gross national saving (percent of GDP) 2025: 42.1; 2026: 41.5; 2027: 41.2; 2028: 41.3.
- Output gap estimate 2025: -1.6; 2026: -1.0; 2027: -0.8; 2028: -0.5; 2029: 0.0.
- Consumer prices (average): 2023: 2.5; 2024: 0.9; 2025: 1.8; 2026: 1.9 (as reported in the table).
- GDP Deflator series excerpt: 2023: 1.2; 2024: -0.4; 2025: -0.7.
- Total social financing (growth rates): 2023: 9.8; 2024: 8.0; 2025: 8.3; 2026: 8.2; 2027: 7.7; 2028: 7.3; 2029: 6.0? (table lists series starting earlier—users should consult Staff Report for full series).
- Total nonfinancial sector debt (percent of GDP) and other debt series are presented in the table with multiple entries across years.
- Household debt (percent of GDP) 2025: 59.4; 2026: 59.0; 2027: 59.7; 2028: 60.2; 2029: 60.7; 2030: 61.3.
- Non-financial corporate domestic debt (percent of GDP) series in table: 2025: 116; 2026: 122; 2027: 124; 2028: 126; 2029: 127.
- General budgetary government net lending/borrowing (Percent of GDP): 2025: -7.4; 2026: -8.7; 2027: -8.5; 2028: -8.2; 2029: -8.1; 2030: -8.0.
- Government revenue (percent of GDP) 2025: 25.2; 2026: 25.4; 2027: 25.7.
- Government expenditure (percent of GDP) 2025: 33.0; 2026: 33.7; 2027: 33.9; 2028: 33.8.
- Government debt (percent of GDP): 2024: 60.9; 2025: 68.4; 2026: 75.1; 2027: 78.9; 2028: 81.8; 2029: 84.4; 2030: 86.9.
- Current account balance (percent of GDP) time series includes 2025 estimate noted in narrative as 3.3 percent of GDP.
- Net international investment position series: 2025: 20.2; 2026: 22.1; 2027: 23.7; 2028: 24.9; 2029: 25.8; 2030: 26.5.
- Gross official reserves (billions of U.S. dollars): 2025: 3,703; 2026: 3,990; 2027: 4,277; 2028: 4,562; 2029: 4,862; 2030: 5,170.
- Nominal GDP (billions of RMB): 2025: 140,188; 2026: 145,473; 2027: 152,734; 2028: 161,131; 2029: 170,185; 2030: 179,372.
- Augmented debt (percent of GDP): 2025: 126.6; 2026: 135.3; 2027: 141.5; 2028: 146.2; 2029: 150.0; 2030: 153.7.
- Augmented net lending/borrowing (percent of GDP) 2025: -14.3; 2026: -14.2; 2027: -13.7; 2028: -12.5.
- Change in Augmented Cyclically-Adjusted Primary Balance (percent of potential GDP) series excerpt: 2022: -2.6; 2023: -0.9; 2024: 0.6 (as reported in table).
Financial Stability and Debt-Related Diagnostics
- Directors emphasized elevated financial stability risks and the need to address legacy asset vulnerabilities, including LGFV debt.
- Recommendations include timely loss recognition, market-based pricing, restructuring unsustainable LGFV debt through insolvency frameworks, and strengthening fiscal frameworks to prevent future debt buildup.
International Monetary Fund — Executive Board conclusion of the 2025 Article IV Consultation with the People’s Republic of China (Press Release No. 26/053).