## Opening Remarks for the Press Briefing of the 2022 China Article IV Staff Report

_IMF News, February 3, 2023_

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## Bibliographic details
- Authors: Thomas Helbling
- Published: February 3, 2023

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### Growth projections and timing of consultations
- The discussions for the 2022 Article IV Consultation with China took place in the first half of November last year.
- The projections in the Article IV Staff Report were finalized in mid–December for an Executive Board discussion that took place in mid-January.
- China’s 2022 Q4 GDP outcome was released after the Executive Board meeting; forecasts were revised for the January 2023 WEO Update (not included in the Staff Report or Staff Supplement).
- Key numeric forecast:
  - We now project growth to increase from 3 percent in 2022 to 5.2 percent in 2023 driven by a rebound in private consumption amid the earlier-than-anticipated reopening in China.
- The growth forecast is subject to a high degree of uncertainty, including due to the future evolution of the virus.

### Risks and uncertainty
- Downside risks:
  - Potential economic disruptions from the current and future waves of covid infections.
  - A sharper-than-expected slowdown in the property sector.
  - The reopening could lead to stronger-than-expected inflationary pressures.
- Upside risks:
  - An even stronger recovery in private consumption and investment.

### Near-term macro policy guidance
- Given the still-negative output gap in 2023 and significant downside risks, policymakers should avoid a premature tightening of macroeconomic policies.
- Recommended stance:
  - A neutral fiscal stance with the composition of spending shifted toward households would support the recovery.
  - Additional monetary policy accommodation would help secure the recovery as slack in the economy remains significant and inflation pressures are muted.
- Note on policy timing:
  - Support provided in 2022 will expire, reinforcing the need to maintain appropriate accommodation in 2023.

### Real estate sector recommendations
- Authorities’ recent policy measures are welcome but additional action is needed to end the real estate crisis.
- Specific recommendations:
  - Increase further funding for completion of troubled projects.
  - Promote market-based restructuring.
- Expected benefits:
  - Help restore homebuyer confidence.
  - Contain financial stability risks.

### Structural reforms to lift potential growth
- China’s potential growth is experiencing headwinds from demographic trends and slowing productivity growth.
- Key structural policy priorities:
  - Reaccelerate pro-growth reforms.
  - Further open domestic markets.
  - Ensure competitive neutrality between private firms and state-owned enterprises.
- Objective:
  - Shore up low productivity growth at a time of shrinking labor supply.

### China’s global role
- Together with other countries, China can play a leading role in:
  - Addressing geoeconomic tensions.
  - Alleviating debt pressures in economies facing debt distress.
  - Strengthening global trade openness and transparency.
  - Confronting climate change.

*Opening Remarks for the Press Briefing of the 2022 China Article IV Staff Report — By Thomas Helbling, Deputy Director, Asia and Pacific Department, February 3, 2023*

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## References

- [China’s Economy is Rebounding, But Reforms Are Still Needed](https://www.imf.org/en/news/articles/2023/02/02/cf-chinas-economy-is-rebounding-but-reforms-are-still-needed)
- [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)
- [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)

_Source: https://www.imf.org/en/news/articles/2023/02/01/sp-china-aiv-press-briefing-opening-remarks_