{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with the People’s Republic of China",
  "publication": "IMF News, August 2, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/07/31/pr24295-china-imf-exec-board-concludes-2024-art-iv-consult",
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  "summary": "Washington, DC – August 2, 2024: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the People’s Republic of China on July 19, 2024.",
  "publishDate": "2024-08-02",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the People’s Republic of China on July 19, 2024. (Press Release No. 24/295)\n- China’s economy remained resilient despite continued weakness in the property sector:\n  - GDP grew by 5.2 percent in 2023.\n  - GDP grew by 5 percent y/y in the first half of 2024.\n- Growth drivers: strong public investment, post-COVID recovery in private consumption, and more recently net exports.\n- Inflation has been low in recent quarters amid continued economic slack."
    },
    {
      "heading": "Outlook and Projections",
      "content": "- Near term:\n  - Growth is projected to be broadly in line with the government’s target in 2024.\n  - Inflation is expected to pick up gradually as the output gap closes and the impact of lower commodity prices wanes.\n- Medium term:\n  - Growth is projected to gradually decline to about 3.3 percent in 2029 amid headwinds from weak productivity and an aging population.\n- Uncertainty is high; upside and downside scenarios noted:\n  - Downside: deeper-than-expected contraction in the property sector combined with high debt could cause sustained disinflationary pressures and adverse macro-financial feedback loops.\n  - Upside: decisive policy action to facilitate property-sector adjustment or market-oriented structural reforms could boost confidence and yield better-than-expected outcomes."
    },
    {
      "heading": "Executive Board Assessment — Key Findings",
      "content": "- Directors welcomed resilient growth and the post‑pandemic recovery in private consumption.\n- Directors emphasized downside risks from:\n  - Ongoing adjustment in the property market.\n  - Drag from local government debt.\n- Short-term macro policy stance:\n  - Directors concurred that macroeconomic policies should support domestic demand in the short term.\n  - A neutral structural fiscal stance in 2024 would help restore consumer confidence and support domestic demand while mitigating downside risks.\n- Fiscal and structural priorities:\n  - Reorient expenditure away from investment toward households via expanded social protection and more progressive tax regime.\n  - A gradual decline in the structural fiscal deficit can begin in 2025, paced by recovery strength, inflation, and property outlook.\n  - Stabilizing public debt requires sustained fiscal consolidation through reduced off‑budget investment and wide‑ranging tax and social security reforms.\n  - Improve monitoring of local government finances, reduce structural expenditure‑revenue gaps, and establish subnational fiscal rules.\n  - Reduce debt stock of local government financing vehicles via greater use of insolvency tools.\n- Monetary and exchange rate policy:\n  - Directors welcomed the People’s Bank of China’s monetary policy response and encouraged additional monetary easing via interest rates to boost domestic demand and mitigate deflation risks.\n  - Greater exchange rate flexibility would help absorb external shocks.\n- Financial sector and regulatory reforms:\n  - Noted significant changes to regulatory and supervisory architecture to enhance risk mitigation.\n  - Financial stability risks remain elevated; call to phase out forbearance measures, strictly apply prudential policies, and tackle legacy vulnerabilities.\n  - Need comprehensive strategy to strengthen small and medium banks, upgrade crisis management and bank resolution frameworks, and enhance systemic risk oversight.\n  - Continue strengthening the AML/CFT framework.\n- Structural reform priorities to foster greener and more balanced growth:\n  - Rebalance demand toward consumption, boost services potential by reducing regulatory barriers.\n  - Implement SOE reforms, gradually increase the retirement age, and strengthen labor market policies.\n  - Accelerate power sector reforms, including reforms to the emission trading system.\n- External and multilateral role:\n  - Directors welcomed China’s constructive role in supporting sovereign debt restructuring in low‑income and vulnerable countries and tackling the global climate crisis.\n  - Agreed that scaling back industrial policies (used only for well‑defined market failures) and improving transparency around government support could reduce domestic resource misallocation, lessen fragmentation pressures, and mitigate international spillovers.\n- Data transparency:\n  - Directors agreed that addressing remaining data gaps would help enhance data transparency and strengthen policymaking."
    },
    {
      "heading": "Policy Recommendations (summarized)",
      "content": "- Short term:\n  - Support domestic demand with neutral structural fiscal stance in 2024.\n  - Consider additional monetary easing via interest rates; allow greater exchange rate flexibility.\n- Medium and long term:\n  - Reorient fiscal spending toward households and social protection; implement more progressive taxation.\n  - Begin gradual fiscal consolidation from 2025, contingent on recovery and inflation.\n  - Strengthen fiscal frameworks: monitor local government finances, reduce expenditure‑revenue gaps, establish subnational fiscal rules.\n  - Use insolvency tools to address LGFV debt where appropriate.\n  - Phase out financial forbearance, strengthen prudential standards, upgrade crisis management and resolution frameworks.\n  - Advance structural reforms: SOE reform, retirement-age increases, labor market policies, reduce regulatory barriers to services, accelerate power-sector and ETS reforms.\n  - Improve transparency of government support and scale back industrial policies except where market failures are well defined.\n  - Address data gaps to improve transparency and policy effectiveness."
    },
    {
      "heading": "Selected Economic Indicators (2019–2029; annual percentage change unless otherwise indicated)",
      "content": "- Real GDP (base=2015)\n  - 2019: 6.0\n  - 2020: 2.2\n  - 2021: 8.4\n  - 2022: 3.0\n  - 2023: 5.2\n  - 2024: 5.0\n  - 2025: 4.5\n  - 2026: 4.1\n  - 2027: 3.6\n  - 2028: 3.4\n  - 2029: 3.3\n- Total domestic demand\n  - 2019: 5.3\n  - 2020: 1.7\n  - 2021: 6.8\n  - 2022: 2.8\n  - 2023: 6.1\n  - 2024: 4.8\n  - 2025: 4.6\n  - 2026: 4.3\n  - 2027: 3.7\n  - 2028: 3.5\n- Consumption\n  - 2019: 6.3\n  - 2020: -0.3\n  - 2021: 9.0\n  - 2022: 2.3\n  - 2023: 8.0\n  - 2024: 5.6\n  - 2025: 4.7\n  - 2026: 4.2\n  - 2027: 3.8\n- Fixed investment\n  - 2019: 3.2\n  - 2020: 4.9\n  - 2021: 4.4\n  - 2022: 3.1\n- Net exports (contribution)\n  - 2019: 0.7\n  - 2020: 0.6\n  - 2021: 1.8\n  - 2022: 0.3\n  - 2023: -0.6\n  - 2024: 0.4\n  - 2025: 0.0\n- Total capital formation (percent of GDP)\n  - 2019: 43.1\n  - 2020: 42.9\n  - 2021: 43.3\n  - 2022: 43.2\n  - 2023: 41.6\n  - 2024: 41.8\n  - 2025: 41.7\n- Gross national saving (percent of GDP) 1/\n  - 2019: 43.8\n  - 2020: 44.5\n  - 2021: 45.3\n  - 2022: 45.7\n  - 2023: 43.0\n  - 2024: 43.4\n  - 2025: 42.7\n- Output gap estimate\n  - 2019: -1.0\n  - 2020: -4.0\n  - 2021: -1.1\n  - 2022: -2.8\n  - 2023: -2.0\n  - 2024: -1.2\n  - 2025: -0.5\n- Unemployment rate (year-end) 2/\n  - 2019: 5.1\n  - 2020: 5.5\n- Consumer prices (average)\n  - 2019: 2.9\n  - 2020: 2.5\n  - 2021: 0.9\n  - 2022: 2.0\n  - 2023: 0.2\n  - 2024: 1.9\n- Consumer prices (end of period)\n  - 2019: 1.5\n- GDP Deflator\n  - 2019: 2.1\n  - 2020: 1.3\n  - 2021: 0.1\n- Total social financing (annual change)\n  - 2019: 10.7\n  - 2020: 13.3\n  - 2021: 10.3\n  - 2022: 9.6\n  - 2023: 9.8\n  - 2024: 8.6\n  - 2025: 8.5\n  - 2026: 7.5\n- Total social financing (in percent of GDP)\n  - 2019: 254\n  - 2020: 278\n  - 2021: 274\n  - 2022: 286\n  - 2023: 301\n  - 2024: 310\n  - 2025: 317\n  - 2026: 320\n  - 2027: 326\n  - 2028: 333\n  - 2029: 339\n- Household debt (percent of GDP)\n  - 2019: 55.8\n  - 2020: 61.6\n  - 2021: 62.1\n  - 2022: 62.3\n  - 2023: 63.7\n  - 2024: 64.0\n  - 2025: 63.0\n  - 2026: 62.7\n  - 2027: 62.6\n  - 2028: 62.5\n  - 2029: 62.4\n- Non-financial corporate domestic debt (percent of GDP)\n  - 2019: 106\n  - 2020: 112\n  - 2021: 116\n  - 2022: 119\n  - 2023: 122\n  - 2024: 123\n  - 2025: 125\n  - 2026: 127\n- General government net lending/borrowing (Percent of GDP) 4/\n  - 2019: -6.1\n  - 2020: -9.7\n  - 2021: -6.0\n  - 2022: -7.5\n  - 2023: -7.0\n  - 2024: -7.4\n  - 2025: -7.6\n  - 2026: -7.8\n  - 2027: -7.9\n  - 2028: -8.1\n  - 2029: -8.2\n- Revenue (percent of GDP)\n  - 2019: 28.1\n  - 2020: 25.7\n  - 2021: 26.6\n  - 2022: 26.0\n  - 2023: 26.3\n  - 2024: 26.4\n  - 2025: 26.8\n  - 2026: 27.0\n- Expenditure (percent of GDP)\n  - 2019: 34.2\n  - 2020: 35.4\n  - 2021: 32.7\n  - 2022: 33.5\n  - 2023: 33.7\n  - 2024: 34.0\n  - 2025: 34.4\n  - 2026: 34.7\n  - 2027: 35.0\n  - 2028: 35.3\n- Debt (percent of GDP)\n  - 2019: 38.5\n  - 2020: 45.4\n  - 2021: 46.9\n  - 2022: 50.7\n  - 2023: 56.3\n  - 2024: 60.5\n  - 2025: 67.1\n  - 2026: 70.9\n  - 2027: 74.9\n  - 2028: 79.1\n- Current account balance (percent of GDP)\n  - 2019: 1.4\n  - 2020: 1.2\n- Services balance\n  - 2019: -1.8\n  - 2020: -1.3\n  - 2021: -1.4\n  - 2022: -1.5\n  - 2023: -1.6\n  - 2024: -1.7\n- Net international investment position\n  - 2019: 16.0\n  - 2020: 15.4\n  - 2021: 12.3\n  - 2022: 13.6\n  - 2023: 16.4\n  - 2024: 17.2\n  - 2025: 17.5\n  - 2026: 17.8\n  - 2027: 18.1\n  - 2028: 18.3\n  - 2029: 18.5\n- Gross official reserves (billions of U.S. dollars)\n  - 2019: 3,223\n  - 2020: 3,357\n  - 2021: 3,427\n  - 2022: 3,307\n  - 2023: 3,450\n  - 2024: 3,817\n  - 2025: 4,151\n  - 2026: 4,259\n  - 2027: 4,377\n  - 2028: 4,497\n  - 2029: 4,619\n- Nominal GDP (billions of RMB) 5/\n  - 2019: 99,071\n  - 2020: 102,563\n  - 2021: 114,528\n  - 2022: 120,247\n  - 2023: 125,798\n  - 2024: 132,273\n  - 2025: 140,670\n  - 2026: 149,413\n  - 2027: 157,829\n  - 2028: 166,426\n  - 2029: 175,317\n- Augmented debt (percent of GDP) 6/\n  - 2019: 86.3\n  - 2020: 98.8\n  - 2021: 100.8\n  - 2022: 107.9\n  - 2023: 116.9\n  - 2024: 124.0\n  - 2025: 128.9\n  - 2026: 133.7\n  - 2027: 138.7\n  - 2028: 143.6\n  - 2029: 148.2\n- Augmented net lending/borrowing (percent of GDP) 6/\n  - 2019: -12.5\n  - 2020: -17.0\n  - 2021: -12.1\n  - 2022: -13.4\n  - 2023: -13.0\n  - 2024: -13.2\n  - 2025: -13.1\n  - 2026: -12.9\n  - 2027: -12.7\n  - 2028: -12.2\n- Change in Augmented Cyclically-Adjusted Primary Balance 7/\n  - 2019: -3.1\n  - 2020: -2.4\n  - 2021: -0.2\n  - 2022: 0.5\n\nSources and notes included in the original release: Bloomberg; CEIC Data Company Limited; IMF International Financial Statistics database; and IMF staff estimates and projections. Footnotes in the release explain revisions and coverage of fiscal and augmented measures.\n\nSource: Press Release No. 24/295, IMF Communications Department, August 2, 2024.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- People's Republic of China and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- [[1]](https://www.imf.org/?scitemid=%7BEF5B188E-5564-4B7C-9068-88CECC867635%7D&sclang=en&scmode=preview&scsite=imf)\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/07/31/pr24295-china-imf-exec-board-concludes-2024-art-iv-consult"
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    "Published: August 2, 2024",
    "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the People’s Republic of China on July 19, 2024. (Press Release No. 24/295)",
    "China’s economy remained resilient despite continued weakness in the property sector:",
    "Growth drivers: strong public investment, post-COVID recovery in private consumption, and more recently net exports.",
    "Inflation has been low in recent quarters amid continued economic slack.",
    "Near term:",
    "Medium term:",
    "Uncertainty is high; upside and downside scenarios noted:",
    "Directors welcomed resilient growth and the post‑pandemic recovery in private consumption.",
    "Directors emphasized downside risks from:",
    "Short-term macro policy stance:",
    "Fiscal and structural priorities:",
    "Monetary and exchange rate policy:",
    "Financial sector and regulatory reforms:",
    "Structural reform priorities to foster greener and more balanced growth:",
    "External and multilateral role:",
    "Data transparency:",
    "Short term:",
    "Medium and long term:",
    "Real GDP (base=2015)",
    "Total domestic demand",
    "Consumption",
    "Fixed investment",
    "Net exports (contribution)",
    "Total capital formation (percent of GDP)",
    "Gross national saving (percent of GDP) 1/",
    "Output gap estimate",
    "Unemployment rate (year-end) 2/",
    "Consumer prices (average)",
    "Consumer prices (end of period)",
    "GDP Deflator",
    "Total social financing (annual change)",
    "Total social financing (in percent of GDP)",
    "Household debt (percent of GDP)",
    "Non-financial corporate domestic debt (percent of GDP)",
    "General government net lending/borrowing (Percent of GDP) 4/",
    "Revenue (percent of GDP)",
    "Expenditure (percent of GDP)",
    "Debt (percent of GDP)",
    "Current account balance (percent of GDP)",
    "Services balance",
    "Net international investment position",
    "Gross official reserves (billions of U.S. dollars)",
    "Nominal GDP (billions of RMB) 5/",
    "Augmented debt (percent of GDP) 6/",
    "Augmented net lending/borrowing (percent of GDP) 6/",
    "Change in Augmented Cyclically-Adjusted Primary Balance 7/",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[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/)",
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    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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