IMF says risk control crucial to maintain China’s growth

WASHINGTON - The International Monetary Fund (IMF) says that containing financial risks and avoiding further stimulus measures should be the main priorities for policymakers in China as they contemplate fresh strategies for sustained economic growth. The IMF has retained its annual GDP growth forecast for the country at 7.5% but lowered growth projections for next year from 7.3% to around 7%, a level it says is realistic - if the Government carries out extensive financial reforms.

Fiscal reforms, strengthening of local government finances, liberalisation of deposit interest rates, and the introduction of deposit insurance to remove distortions in the pricing of risk and borrowing costs are measures that need immediate attention, the IMF said. It also cautioned against stimulus unless growth slows significantly below this year’s target.

The Government is targeting a GDP growth rate of 7.5% this year.  However, the 7.4% growth recorded in the first quarter has triggered concerns that China might miss the annual target for the first time in decades.