June 14, 2017
Reform progress needs to accelerate to secure medium-term stability and address the risk that the current trajectory of the economy could eventually lead to a sharp adjustment.
", "publishDate": "2017-06-14", "sections": [ { "heading": "Mission overview and context", "content": "- Press Release date: June 14, 2017\n- Mission period: June 1 to 14\n- Mission led by: James Daniel, Assistant Director of the Asia and Pacific Department\n- Final policy discussions joined by: David Lipton, IMF First Deputy Managing Director\n- Meetings included senior officials: Vice Premier Ma Kai; People’s Bank of China Governor Zhou Xiaochuan; Director of Central Economic and Financial Reform Leading Group Liu He; Finance Minister Xiao Jie; China Banking Regulatory Commission Chairman Guo Shuqing; China Securities Regulatory Commission Chairman Liu Shiyu\n- Statement type: End-of-Mission press release conveying preliminary IMF staff findings; staff report to be prepared for the IMF’s Executive Board subject to management approval" }, { "heading": "Growth projections and risk assessment", "content": "- Staff project GDP to expand by 6.7 percent in 2017.\n- Staff project GDP to expand by 6.4 percent annually on average between 2018-20.\n- Key assessment: China continues to transition to a more sustainable growth path, but reform progress needs to accelerate to secure medium-term stability and to address the risk that the current trajectory could eventually lead to a sharp adjustment.\n- Near-term risks: Some near-term risks have receded, but medium-term vulnerabilities remain." }, { "heading": "Progress noted by IMF staff", "content": "- Policy support (expansionary credit and public investment) has helped maintain strong growth.\n- Corporate debt growth is slowing, reflecting restructuring initiatives and overcapacity reduction.\n- The house price boom is being gradually contained and excess inventory reduced.\n- Local government borrowing frameworks are being improved and a blueprint for reforming central-local fiscal relations has been published.\n- The creation of new businesses has tripled since the 2014 reform.\n- Data weaknesses have been recognized and actions taken to improve integrity." }, { "heading": "Core policy recommendations (high level)", "content": "- Switch faster from investment to consumption.\n- Increase the role of market forces.\n- Implement a more sustainable macro policies mix.\n- Continue regulatory tightening to address financial sector risks.\n- Tackle nonfinancial sector debt.\n- Further improve policy frameworks and data coverage." }, { "heading": "Specific recommended actions", "content": "- Boost consumption:\n - Increase public spending on health, pensions, education, and transfers to poor households to reduce excessive precautionary savings.\n - Make the tax system more progressive and greener to boost growth while reducing high income inequality and pollution.\n- Increase market forces and SOE reform:\n - Accelerate and broaden the existing reform agenda for state-owned enterprises (SOE), including phasing out implicit support and increasing tolerance for default and exit.\n - Remove barriers to entry, especially in the highly closed service sector.\n - Set more ambitious targets to reduce overcapacity in coal and steel sectors and other sectors, with greater reliance on market forces.\n- Macro-policy mix and debt reduction:\n - Focus more on the quality and sustainability of growth and less on quantitative targets.\n - Pursue gradual fiscal consolidation.\n - Adopt less accommodative monetary policy.\n - Increase recognition of losses, especially for underperforming SOEs and zombie enterprises.\n - Reduce the flow of new debt by cutting off-budget public investment and imposing hard budget constraints on SOEs.\n- Financial sector policy:\n - Continue the recent focus on tackling financial sector risks, even if this entails some financial tensions and slower growth.\n - IMF will provide more detailed analysis and recommendations in the five-yearly Financial Sector Assessment Program (FSAP) review, expected to be completed by the end of the year.\n- Monetary policy framework and capital account:\n - Phase out monetary targets over the medium term.\n - Resume progress towards a flexible exchange rate.\n - Improve communications.\n - Apply capital flow measures transparently and consistently.\n - Sequence further capital account liberalization with supporting reforms, including an effective monetary policy framework, a sound financial system, and exchange rate flexibility.\n- Central-local fiscal relations:\n - Centralize some expenditure responsibilities, such as social insurance.\n - Give local governments more revenue-raising authority and sufficient debt quotas to reduce reliance on off-budget borrowing and land sales.\n- Data and transparency:\n - Address remaining data gaps to further improve policy making and meet G20 commitments." }, { "heading": "Concluding assessment", "content": "- IMF staff express confidence that, given China’s record of successful reforms and the authorities’ commitment, China can find its way through the challenges ahead.\n- Staff appreciation expressed for the hospitality and productive discussions with Chinese authorities during the mission.\n\nIMF Staff Completes 2017 Article IV Mission to China — Press Release No. 17/219, June 14, 2017\n\n---\n\n\n References\n\n- David Lipton\n- Modernizing China: Investing in Soft Infrastructure\n- People's Republic of China and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/06/07/pr17219-china-imf-staff-completes-2017-article-iv-mission" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/06/07/pr17219-china-imf-staff-completes-2017-article-iv-mission/index.md)", "[Structured JSON version](/en/news/articles/2017/06/07/pr17219-china-imf-staff-completes-2017-article-iv-mission/index.json)", "[Bundle manifest](/en/news/articles/2017/06/07/pr17219-china-imf-staff-completes-2017-article-iv-mission/bundle-manifest.json)", "Published: June 14, 2017", "Press Release date: June 14, 2017", "Mission period: June 1 to 14", "Mission led by: James Daniel, Assistant Director of the Asia and Pacific Department", "Final policy discussions joined by: David Lipton, IMF First Deputy Managing Director", "Meetings included senior officials: Vice Premier Ma Kai; People’s Bank of China Governor Zhou Xiaochuan; Director of Central Economic and Financial Reform Leading Group Liu He; Finance Minister Xiao Jie; China Banking Regulatory Commission Chairman Guo Shuqing; China Securities Regulatory Commission Chairman Liu Shiyu", "Statement type: End-of-Mission press release conveying preliminary IMF staff findings; staff report to be prepared for the IMF’s Executive Board subject to management approval", "Staff project GDP to expand by 6.7 percent in 2017.", "Staff project GDP to expand by 6.4 percent annually on average between 2018-20.", "Key assessment: China continues to transition to a more sustainable growth path, but reform progress needs to accelerate to secure medium-term stability and to address the risk that the current trajectory could eventually lead to a sharp adjustment.", "Near-term risks: Some near-term risks have receded, but medium-term vulnerabilities remain.", "Policy support (expansionary credit and public investment) has helped maintain strong growth.", "Corporate debt growth is slowing, reflecting restructuring initiatives and overcapacity reduction.", "The house price boom is being gradually contained and excess inventory reduced.", "Local government borrowing frameworks are being improved and a blueprint for reforming central-local fiscal relations has been published.", "The creation of new businesses has tripled since the 2014 reform.", "Data weaknesses have been recognized and actions taken to improve integrity.", "Switch faster from investment to consumption.", "Increase the role of market forces.", "Implement a more sustainable macro policies mix.", "Continue regulatory tightening to address financial sector risks.", "Tackle nonfinancial sector debt.", "Further improve policy frameworks and data coverage.", "Boost consumption:", "Increase market forces and SOE reform:", "Macro-policy mix and debt reduction:", "Financial sector policy:", "Monetary policy framework and capital account:", "Central-local fiscal relations:", "Data and transparency:", "IMF staff express confidence that, given China’s record of successful reforms and the authorities’ commitment, China can find its way through the challenges ahead.", "Staff appreciation expressed for the hospitality and productive discussions with Chinese authorities during the mission.", "[David Lipton](http://www.imf.org/external/np/omd/bios/dl.htm)", "[Modernizing China: Investing in Soft Infrastructure](https://www.bookstore.imf.org/books/title/modernizing-china)", "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2017/06/07/pr17219-china-imf-staff-completes-2017-article-iv-mission/index.md", "json": "/en/news/articles/2017/06/07/pr17219-china-imf-staff-completes-2017-article-iv-mission/index.json", "bundleManifest": "/en/news/articles/2017/06/07/pr17219-china-imf-staff-completes-2017-article-iv-mission/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T20:54:26.566Z" }