## IMF Executive Board Concludes 2024 Article IV Consultation with the People’s Republic of China

_IMF News, August 2, 2024_

## Source details

**Canonical URL:** [IMF Executive Board Concludes 2024 Article IV Consultation with the People’s Republic of China](https://www.imf.org/en/news/articles/2024/07/31/pr24295-china-imf-exec-board-concludes-2024-art-iv-consult)

## Other formats

- [Markdown version](/en/news/articles/2024/07/31/pr24295-china-imf-exec-board-concludes-2024-art-iv-consult/index.md)
- [Structured JSON version](/en/news/articles/2024/07/31/pr24295-china-imf-exec-board-concludes-2024-art-iv-consult/index.json)
- [Bundle manifest](/en/news/articles/2024/07/31/pr24295-china-imf-exec-board-concludes-2024-art-iv-consult/bundle-manifest.json)

## Bibliographic details
- Published: August 2, 2024

---

### Overview
- 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:
  - GDP grew by 5.2 percent in 2023.
  - GDP grew by 5 percent y/y in the first half of 2024.
- 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.

### Outlook and Projections
- Near term:
  - Growth is projected to be broadly in line with the government’s target in 2024.
  - Inflation is expected to pick up gradually as the output gap closes and the impact of lower commodity prices wanes.
- Medium term:
  - Growth is projected to gradually decline to about 3.3 percent in 2029 amid headwinds from weak productivity and an aging population.
- Uncertainty is high; upside and downside scenarios noted:
  - Downside: deeper-than-expected contraction in the property sector combined with high debt could cause sustained disinflationary pressures and adverse macro-financial feedback loops.
  - Upside: decisive policy action to facilitate property-sector adjustment or market-oriented structural reforms could boost confidence and yield better-than-expected outcomes.

### Executive Board Assessment — Key Findings
- Directors welcomed resilient growth and the post‑pandemic recovery in private consumption.
- Directors emphasized downside risks from:
  - Ongoing adjustment in the property market.
  - Drag from local government debt.
- Short-term macro policy stance:
  - Directors concurred that macroeconomic policies should support domestic demand in the short term.
  - A neutral structural fiscal stance in 2024 would help restore consumer confidence and support domestic demand while mitigating downside risks.
- Fiscal and structural priorities:
  - Reorient expenditure away from investment toward households via expanded social protection and more progressive tax regime.
  - A gradual decline in the structural fiscal deficit can begin in 2025, paced by recovery strength, inflation, and property outlook.
  - Stabilizing public debt requires sustained fiscal consolidation through reduced off‑budget investment and wide‑ranging tax and social security reforms.
  - Improve monitoring of local government finances, reduce structural expenditure‑revenue gaps, and establish subnational fiscal rules.
  - Reduce debt stock of local government financing vehicles via greater use of insolvency tools.
- Monetary and exchange rate policy:
  - 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.
  - Greater exchange rate flexibility would help absorb external shocks.
- Financial sector and regulatory reforms:
  - Noted significant changes to regulatory and supervisory architecture to enhance risk mitigation.
  - Financial stability risks remain elevated; call to phase out forbearance measures, strictly apply prudential policies, and tackle legacy vulnerabilities.
  - Need comprehensive strategy to strengthen small and medium banks, upgrade crisis management and bank resolution frameworks, and enhance systemic risk oversight.
  - Continue strengthening the AML/CFT framework.
- Structural reform priorities to foster greener and more balanced growth:
  - Rebalance demand toward consumption, boost services potential by reducing regulatory barriers.
  - Implement SOE reforms, gradually increase the retirement age, and strengthen labor market policies.
  - Accelerate power sector reforms, including reforms to the emission trading system.
- External and multilateral role:
  - Directors welcomed China’s constructive role in supporting sovereign debt restructuring in low‑income and vulnerable countries and tackling the global climate crisis.
  - 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.
- Data transparency:
  - Directors agreed that addressing remaining data gaps would help enhance data transparency and strengthen policymaking.

### Policy Recommendations (summarized)
- Short term:
  - Support domestic demand with neutral structural fiscal stance in 2024.
  - Consider additional monetary easing via interest rates; allow greater exchange rate flexibility.
- Medium and long term:
  - Reorient fiscal spending toward households and social protection; implement more progressive taxation.
  - Begin gradual fiscal consolidation from 2025, contingent on recovery and inflation.
  - Strengthen fiscal frameworks: monitor local government finances, reduce expenditure‑revenue gaps, establish subnational fiscal rules.
  - Use insolvency tools to address LGFV debt where appropriate.
  - Phase out financial forbearance, strengthen prudential standards, upgrade crisis management and resolution frameworks.
  - Advance structural reforms: SOE reform, retirement-age increases, labor market policies, reduce regulatory barriers to services, accelerate power-sector and ETS reforms.
  - Improve transparency of government support and scale back industrial policies except where market failures are well defined.
  - Address data gaps to improve transparency and policy effectiveness.

### Selected Economic Indicators (2019–2029; annual percentage change unless otherwise indicated)
- Real GDP (base=2015)
  - 2019: 6.0
  - 2020: 2.2
  - 2021: 8.4
  - 2022: 3.0
  - 2023: 5.2
  - 2024: 5.0
  - 2025: 4.5
  - 2026: 4.1
  - 2027: 3.6
  - 2028: 3.4
  - 2029: 3.3
- Total domestic demand
  - 2019: 5.3
  - 2020: 1.7
  - 2021: 6.8
  - 2022: 2.8
  - 2023: 6.1
  - 2024: 4.8
  - 2025: 4.6
  - 2026: 4.3
  - 2027: 3.7
  - 2028: 3.5
- Consumption
  - 2019: 6.3
  - 2020: -0.3
  - 2021: 9.0
  - 2022: 2.3
  - 2023: 8.0
  - 2024: 5.6
  - 2025: 4.7
  - 2026: 4.2
  - 2027: 3.8
- Fixed investment
  - 2019: 3.2
  - 2020: 4.9
  - 2021: 4.4
  - 2022: 3.1
- Net exports (contribution)
  - 2019: 0.7
  - 2020: 0.6
  - 2021: 1.8
  - 2022: 0.3
  - 2023: -0.6
  - 2024: 0.4
  - 2025: 0.0
- Total capital formation (percent of GDP)
  - 2019: 43.1
  - 2020: 42.9
  - 2021: 43.3
  - 2022: 43.2
  - 2023: 41.6
  - 2024: 41.8
  - 2025: 41.7
- Gross national saving (percent of GDP) 1/
  - 2019: 43.8
  - 2020: 44.5
  - 2021: 45.3
  - 2022: 45.7
  - 2023: 43.0
  - 2024: 43.4
  - 2025: 42.7
- Output gap estimate
  - 2019: -1.0
  - 2020: -4.0
  - 2021: -1.1
  - 2022: -2.8
  - 2023: -2.0
  - 2024: -1.2
  - 2025: -0.5
- Unemployment rate (year-end) 2/
  - 2019: 5.1
  - 2020: 5.5
- Consumer prices (average)
  - 2019: 2.9
  - 2020: 2.5
  - 2021: 0.9
  - 2022: 2.0
  - 2023: 0.2
  - 2024: 1.9
- Consumer prices (end of period)
  - 2019: 1.5
- GDP Deflator
  - 2019: 2.1
  - 2020: 1.3
  - 2021: 0.1
- Total social financing (annual change)
  - 2019: 10.7
  - 2020: 13.3
  - 2021: 10.3
  - 2022: 9.6
  - 2023: 9.8
  - 2024: 8.6
  - 2025: 8.5
  - 2026: 7.5
- Total social financing (in percent of GDP)
  - 2019: 254
  - 2020: 278
  - 2021: 274
  - 2022: 286
  - 2023: 301
  - 2024: 310
  - 2025: 317
  - 2026: 320
  - 2027: 326
  - 2028: 333
  - 2029: 339
- Household debt (percent of GDP)
  - 2019: 55.8
  - 2020: 61.6
  - 2021: 62.1
  - 2022: 62.3
  - 2023: 63.7
  - 2024: 64.0
  - 2025: 63.0
  - 2026: 62.7
  - 2027: 62.6
  - 2028: 62.5
  - 2029: 62.4
- Non-financial corporate domestic debt (percent of GDP)
  - 2019: 106
  - 2020: 112
  - 2021: 116
  - 2022: 119
  - 2023: 122
  - 2024: 123
  - 2025: 125
  - 2026: 127
- General government net lending/borrowing (Percent of GDP) 4/
  - 2019: -6.1
  - 2020: -9.7
  - 2021: -6.0
  - 2022: -7.5
  - 2023: -7.0
  - 2024: -7.4
  - 2025: -7.6
  - 2026: -7.8
  - 2027: -7.9
  - 2028: -8.1
  - 2029: -8.2
- Revenue (percent of GDP)
  - 2019: 28.1
  - 2020: 25.7
  - 2021: 26.6
  - 2022: 26.0
  - 2023: 26.3
  - 2024: 26.4
  - 2025: 26.8
  - 2026: 27.0
- Expenditure (percent of GDP)
  - 2019: 34.2
  - 2020: 35.4
  - 2021: 32.7
  - 2022: 33.5
  - 2023: 33.7
  - 2024: 34.0
  - 2025: 34.4
  - 2026: 34.7
  - 2027: 35.0
  - 2028: 35.3
- Debt (percent of GDP)
  - 2019: 38.5
  - 2020: 45.4
  - 2021: 46.9
  - 2022: 50.7
  - 2023: 56.3
  - 2024: 60.5
  - 2025: 67.1
  - 2026: 70.9
  - 2027: 74.9
  - 2028: 79.1
- Current account balance (percent of GDP)
  - 2019: 1.4
  - 2020: 1.2
- Services balance
  - 2019: -1.8
  - 2020: -1.3
  - 2021: -1.4
  - 2022: -1.5
  - 2023: -1.6
  - 2024: -1.7
- Net international investment position
  - 2019: 16.0
  - 2020: 15.4
  - 2021: 12.3
  - 2022: 13.6
  - 2023: 16.4
  - 2024: 17.2
  - 2025: 17.5
  - 2026: 17.8
  - 2027: 18.1
  - 2028: 18.3
  - 2029: 18.5
- Gross official reserves (billions of U.S. dollars)
  - 2019: 3,223
  - 2020: 3,357
  - 2021: 3,427
  - 2022: 3,307
  - 2023: 3,450
  - 2024: 3,817
  - 2025: 4,151
  - 2026: 4,259
  - 2027: 4,377
  - 2028: 4,497
  - 2029: 4,619
- Nominal GDP (billions of RMB) 5/
  - 2019: 99,071
  - 2020: 102,563
  - 2021: 114,528
  - 2022: 120,247
  - 2023: 125,798
  - 2024: 132,273
  - 2025: 140,670
  - 2026: 149,413
  - 2027: 157,829
  - 2028: 166,426
  - 2029: 175,317
- Augmented debt (percent of GDP) 6/
  - 2019: 86.3
  - 2020: 98.8
  - 2021: 100.8
  - 2022: 107.9
  - 2023: 116.9
  - 2024: 124.0
  - 2025: 128.9
  - 2026: 133.7
  - 2027: 138.7
  - 2028: 143.6
  - 2029: 148.2
- Augmented net lending/borrowing (percent of GDP) 6/
  - 2019: -12.5
  - 2020: -17.0
  - 2021: -12.1
  - 2022: -13.4
  - 2023: -13.0
  - 2024: -13.2
  - 2025: -13.1
  - 2026: -12.9
  - 2027: -12.7
  - 2028: -12.2
- Change in Augmented Cyclically-Adjusted Primary Balance 7/
  - 2019: -3.1
  - 2020: -2.4
  - 2021: -0.2
  - 2022: 0.5

Sources 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.

*Source: Press Release No. 24/295, IMF Communications Department, August 2, 2024.*

---


## References

- [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/)
- [[1]](https://www.imf.org/?sc_itemid=%7BEF5B188E-5564-4B7C-9068-88CECC867635%7D&sc_lang=en&sc_mode=preview&sc_site=imf)
- [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)

_Source: https://www.imf.org/en/news/articles/2024/07/31/pr24295-china-imf-exec-board-concludes-2024-art-iv-consult_