IMF Staff Country Reports

The 2022 Article IV Consultation discusses that following an impressive recovery from the initial impact of the pandemic, China’s growth slowed significantly in 2022. In response to slowing growth momentum, macroeconomic policies appropriately turned expansionary in 2022. On the fiscal side, the main measures included a series of tax and other relief measures for small and medium-sized enterprises and spending on infrastructure investment projects, with the augmented cyclically adjusted primary deficit being estimated to have increased by 2.2 percentage points of potential gross domestic product. Structural policy trends are clouding medium-term growth prospects amid weak productivity growth, in large part because of the role of low-productivity state-owned enterprises (SOEs) and declining business dynamism. Reforms securing competitive neutrality between SOEs and privately owned firms have been lacking, while SOEs are being tasked to make advances in strategically important sectors and technologies affected by growing geo-economics fragmentation pressures, further burdening them with responsibilities. While China is a world leader in renewable energy, the unbalanced recovery and extreme weather events have made the achievement of near-term climate goals more challenging.