International Monetary Fund or IMF stated in its Article IV Consultation for China that Chinese economy is set to grow by 5.0 percent in 2025 and 4.5 percent in 2026. These projections reflect an upward revision of 0.2 and 0.3 percentage points, respectively, compared to the October World Economic outlook, driven by welcome macroeconomic policy stimulus measures and lower-than-expected tariffs on China’s exports. Despite resilient growth, imbalances remain significant amid weak domestic demand and deflationary pressures. Low inflation relative to trading partners has led to real exchange rate depreciation, contributing to strong exports and rising current account surplus. IMF noted that the key policy priority is to transition to a consumption-led growth model, which is one of the government’s stated objectives in the 15th Five-Year Plan. In staff’s view, this transition requires more urgent and forceful expansionary macroeconomic policies, reforms to reduce elevated household savings, and a scaling back of inefficient investment and unwarranted industrial policy support. Such a policy package will also reduce external imbalances.

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