{
  "title": "China’s Post-Pandemic Growth: Deepening Reforms and Pursuing Rebalancing",
  "publication": "IMF News, September 23, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/09/23/sp092221-chinas-post-pandemic-growth-deepening-reforms",
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  "summary": "Good morning—zao shang hao! I am delighted to join you again at this year’s Forum and would like to thank you for the opportunity to share a few thoughts on the outlook for the global economy and China, and highlight key policy priorities for the period ahead.",
  "authors": [
    "Geoffrey Okamoto"
  ],
  "publishDate": "2021-09-23",
  "sections": [
    {
      "heading": "Greetings",
      "content": "- Opening: \"Good morning—zao shang hao!\"  \n- Speaker: Geoffrey W.S. Okamoto, IMF First Deputy Managing Director.  \n- Event: Forum on National Affairs, Counsellors’ Office of the State Council.  \n- Date: September 22, 2021."
    },
    {
      "heading": "Global economic outlook",
      "content": "- First-half 2021 growth broadly in line with the July World Economic Outlook projection of \"6 percent growth in 2021\".  \n- Recovery pattern: better-than-expected growth in Q1 2021 followed by loss of momentum in Q2 2021.  \n- Near-term divergences and persistent fault lines from COVID-19 expected to leave lasting imprints on medium-term performance.  \n- Vaccine access: widespread access mainly in advanced economies has helped contain deaths and hospitalizations and allowed greater normalization of economic activity; many emerging and developing economies with limited vaccine access continue to be held back.  \n- Risks highlighted:\n  - Potential for new virus variants to set back progress.\n  - For emerging markets, faster-than-expected policy normalization in major economies could trigger adverse spillovers.\n- Inflation drivers: rise in commodity prices and supply disruptions preventing supply from keeping up with demand; price pressures expected to subside in 2022 for the most part; medium-term inflation expectations remain anchored to policy targets in most economies.  \n- Scarring and vulnerabilities:\n  - Long-lasting and severe consequences for poverty.\n  - Public and private debt levels have risen substantially across economies, posing fiscal sustainability, investment, and growth challenges if not carefully managed."
    },
    {
      "heading": "The recovery is taking hold (China-specific)",
      "content": "- China growth stance:\n  - Recovery has broadly converged to pre-pandemic trend levels.\n  - IMF projection for China: \"growth for 2021 at about 8.0 percent.\"\n- Current concerns:\n  - Growth momentum is slowing; recovery could be more balanced with stronger private consumption.\n  - Fiscal contraction: speed and magnitude of China’s fiscal contraction in H1 2021 was much faster and bigger than anticipated, contributing to growth slowdown.\n  - Other temporary factors slowing growth: natural disasters, policy tightening across a range of sectors, and recurrent COVID outbreaks.\n  - Recurrence of COVID flareups has produced a stop-and-go growth pattern; zero-COVID strategy and localized outbreaks hinder full recovery of private demand in services.\n- Policy near-term guidance:\n  - Importance of continued vaccine development and distribution—especially critical in developing countries.\n  - Macroeconomic policy calibration: as China has frontloaded consolidation efforts, recommend a \"more neutral fiscal stance coupled with moderately supportive monetary policy\" to slow the drag on growth and secure the handoff to private demand."
    },
    {
      "heading": "Looking ahead beyond the recovery: structural challenges and rebalancing",
      "content": "- Key headwinds to China’s growth identified:\n  - An aging population.\n  - Declining productivity growth amid pressures on globalization.\n  - Pandemic-related setbacks in rebalancing toward high-quality growth (balanced, inclusive, and green).\n- Benefits of rebalancing toward consumption and services:\n  - Shift from traditional investment to more consumption-led growth will decrease demand for heavy industrial goods and increase demand for consumer goods and services.\n  - Welfare gains as a more service-oriented economy is more reliant on labor and likely to lift the labor share of income.\n  - Climate benefits via reduced energy- and carbon-intensive heavy-industry leading to lower CO2 emissions.\n- Social protection recommendations to boost household consumption and inclusiveness:\n  - Strengthen social protection to reduce precautionary savings.\n  - Expand coverage and adequacy of social insurance programs—especially unemployment insurance—to support \"common prosperity\" objectives."
    },
    {
      "heading": "Green growth and market reforms",
      "content": "- Progress: some progress on climate goals and rollout of the national ETS (Emissions Trading System).\n- To unlock ETS potential, recommended market reforms in the power sector are needed to:\n  - Pass on the carbon price to downstream sectors and consumers.\n  - Incentivize power producers to adjust production and investments.\n- China’s role: leadership in global climate efforts, co-chairing the G20 Sustainable Finance Study Group, and cooperation with the EU on green investment standards contributing to a greener recovery."
    },
    {
      "heading": "Productivity, market dynamism, and structural reform priorities",
      "content": "- To raise productivity growth and promote market dynamism, recommended actions:\n  - Re-accelerate SOE reforms.\n  - Ensure competitive neutrality between all firms.\n  - Further open up domestic markets.\n  - Enhance digital platform competition via transparent and predictable approaches that preserve market efficiency and financial inclusion.\n- Policy design principles for new market entrants and regulation:\n  - Provide clear and predictable regulatory frameworks.\n  - Allow sufficient time for compliance.\n  - Leave space for dialogue with a broad set of stakeholders.\n  - Seek alignment with other countries where feasible to amplify benefits to global growth, employment, and technological advancement.\n- Expected outcomes:\n  - More affordable services, improved manufacturing productivity through better service inputs, increased innovation and exports of best practice, and improved living standards for Chinese workers and households."
    },
    {
      "heading": "Multilateral contributions and IMF support",
      "content": "- China’s multilateral contributions noted:\n  - Broadening access to vaccines.\n  - Role in providing global debt relief for low-income countries.\n  - Support for multilateral trade, including engagement on WTO reform.\n- Debt relief context:\n  - Pandemic severity has worsened many countries' ability to service pre-crisis debt.\n  - Resolving unsustainable debts will require full commitment and expeditious action by all creditors, public and private, to restore sustainable debt trajectories and enable borrowers to contribute to global prosperity.\n- IMF role and tools:\n  - The IMF stands ready to support multilateral efforts.\n  - New SDR allocation supplements countries’ reserves and uses the collective strength of the Fund’s membership to make \"all 190 member countries a little stronger.\"\n  - SDRs would provide liquidity support to many developing and low-income countries, allowing them to pay for healthcare and support vulnerable people."
    },
    {
      "heading": "Conclusion",
      "content": "- With the right combination of policies and collective efforts, global growth can be steered back on track and the future will look brighter.  \n- Closing: \"Thank you. Xièxiè.\"\n\nGeoffrey W.S. Okamoto, \"China’s Post-Pandemic Growth: Deepening Reforms and Pursuing Rebalancing\", September 22, 2021, IMF.\n\n---\n\n\n References\n\n- Geoffrey W.S. Okamoto\n- People's Republic of China and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/09/23/sp092221-chinas-post-pandemic-growth-deepening-reforms"
    }
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    "Authors: Geoffrey Okamoto",
    "Published: September 23, 2021",
    "Opening: \"Good morning—zao shang hao!\"",
    "Speaker: Geoffrey W.S. Okamoto, IMF First Deputy Managing Director.",
    "Event: Forum on National Affairs, Counsellors’ Office of the State Council.",
    "Date: September 22, 2021.",
    "First-half 2021 growth broadly in line with the July World Economic Outlook projection of \"6 percent growth in 2021\".",
    "Recovery pattern: better-than-expected growth in Q1 2021 followed by loss of momentum in Q2 2021.",
    "Near-term divergences and persistent fault lines from COVID-19 expected to leave lasting imprints on medium-term performance.",
    "Vaccine access: widespread access mainly in advanced economies has helped contain deaths and hospitalizations and allowed greater normalization of economic activity; many emerging and developing economies with limited vaccine access continue to be held back.",
    "Risks highlighted:",
    "Inflation drivers: rise in commodity prices and supply disruptions preventing supply from keeping up with demand; price pressures expected to subside in 2022 for the most part; medium-term inflation expectations remain anchored to policy targets in most economies.",
    "Scarring and vulnerabilities:",
    "China growth stance:",
    "Current concerns:",
    "Policy near-term guidance:",
    "Key headwinds to China’s growth identified:",
    "Benefits of rebalancing toward consumption and services:",
    "Social protection recommendations to boost household consumption and inclusiveness:",
    "Progress: some progress on climate goals and rollout of the national ETS (Emissions Trading System).",
    "To unlock ETS potential, recommended market reforms in the power sector are needed to:",
    "China’s role: leadership in global climate efforts, co-chairing the G20 Sustainable Finance Study Group, and cooperation with the EU on green investment standards contributing to a greener recovery.",
    "To raise productivity growth and promote market dynamism, recommended actions:",
    "Policy design principles for new market entrants and regulation:",
    "Expected outcomes:",
    "China’s multilateral contributions noted:",
    "Debt relief context:",
    "IMF role and tools:",
    "With the right combination of policies and collective efforts, global growth can be steered back on track and the future will look brighter.",
    "Closing: \"Thank you. Xièxiè.\"",
    "[Geoffrey W.S. Okamoto](https://www.imf.org/en/About/senior-officials/Bios/geoffrey-w-s-okamoto/)",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Speeches](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)"
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