2025 China Article IV Consultation Press Conference
IMF News, December 10, 2025
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- Published: December 10, 2025
Outlook and key macroeconomic findings
- IMF upgraded projections for China’s growth to 5 percent in 2025 and 4.5 percent in 2026. These are upward revisions of 0.2 and 0.3 percentage points, respectively, from the October World Economic Outlook.
- China is contributing about 30 percent to global growth.
- Despite sizeable shocks, China’s economy has shown remarkable resilience, supported by strong exports and welcome fiscal stimulus.
- Household incomes have been supported by resilient growth, important amid weak consumer confidence.
Major constraints and risks identified
- Domestic demand has been persistently weak, partly because the property sector is still on a shaky footing, depressing consumer confidence and leading to weak consumption and deflationary pressures.
- Low inflation relative to trading partners has resulted in significant real exchange rate depreciation, making exports cheaper, prolonging reliance on exports, and worsening external imbalances.
- China’s size limits how much growth can be generated from exports; continued export-led growth risks furthering global trade tensions.
- Structural headwinds include slowing productivity growth, high corporate and public debt levels, decreasing returns to investment, and an aging population—factors that point to slower growth going forward.
Actions already taken by the authorities (as noted)
- In the 15th Five Year Plan, authorities prioritized increasing consumption and reorienting the economy from goods to services.
- Adopted an expansionary fiscal stance, eased monetary policy, and implemented some targeted measures to reduce excess saving and address “involution”.
- Gradually increased the retirement age to help expand labor supply and raise medium-term growth prospects.
- Raised subsidies for elderly care and childcare to boost the services sector.
Policy recommendations — three areas of focus
- First area of focus: tackling domestic imbalances and deflationary pressures
- Recommend an even more expansionary macroeconomic policy mix, paired with reforms to reduce excess saving.
- A comprehensive macroeconomic policy package focused on additional fiscal stimulus, supported by further monetary policy easing and greater exchange rate flexibility.
- Fiscal policy should prioritize strengthening the social protection system to give people the confidence and security to spend more and save less.
- Analysis suggests that raising social spending, especially in rural areas, and accelerating Hukou reforms that provide migrant workers with access to social benefits can boost consumption by up to 3 percentage points GDP in the medium term.
- Scale back public investment and industrial policies in support of selected firms and sectors to increase productivity, improve resource allocation, and generate fiscal savings that could be redeployed to social spending and resolving property sector problems.
- Second area of focus: structural reforms to lift medium-term growth
- Reduce regulatory burdens; lower barriers to internal trade, particularly in the service sector; level the playing field across firms.
- Implement labor market measures to reduce skill mismatches and youth unemployment.
- Harness the potential of new technologies, notably artificial intelligence and energy-efficiency, while mitigating labor market dislocations and guarding against new financial stability risks.
- Note: China’s digital infrastructure is well prepared to reap substantial gains from AI.
- Third area of focus: addressing high domestic debt levels
- Years of high investment have left China with high public and corporate debt, leading to elevated risks.
- The government’s debt swap program helps in the short term by reducing financing pressures, but unsustainable local government debt will need to be restructured to minimize long-term costs.
- Combine restructuring with reforms to strengthen financial sector oversight and enhance fiscal discipline and transparency.
Projected benefits of implementing recommendations
- Making material progress on the three priorities could substantially raise China’s GDP level—by about 2.5 percent by 2030.
- Could create some 18 million new jobs.
- Would simultaneously reduce deflationary pressures, help deliver an appreciation of the real exchange rate, and result in a smaller current account surplus.
- A better-balanced Chinese economy, internally and externally, would mean a stronger and healthier global economy.
Overarching policy message
- Pivoting to consumption-led growth is the overarching policy priority for China.
- Seizing the opportunity to switch the growth engine from investment and exports to domestic consumption and to reorient the economy from goods to services requires brave choices and determined policy action.
- IMF looks forward to continuing close engagement with the authorities in support of building a more balanced and inclusive economy.
Opening Remarks by Kristalina Georgieva, Managing Director — 2025 China Article IV Consultation Press Conference, December 10, 2025.