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IMF: China to continue economic recovery from pandemic in 2021

By Chen Jia | | Updated: 2020-11-04 22:32
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Workers assemble control system of instrument panel at a passenger car workshop of Ningde base of SAIC Motor Corporation Ltd in Ningde, East China's Fujian province, Sept 15, 2020. [Photo/Xinhua]

China will continue its economic recovery from the COVID-19 pandemic next year, supported bymoderately expansionary macroeconomic policies, the International Monetary Fund said late on Wednesday.

That comment came after the IMF staff conducted discussions virtually on the 2020 Article IV Consultation with Chinese officials and experts during 10 days.

In a statement after the Article IV review, the Fund projected that Chinese economy will continue its recovery with GDP growth to be at 1.9 percent this year and 8.2 percent in 2021. Core inflation is expected to remain subdued, leaving CPI inflation in 2021 below the pre-crisis target of about 3 percent.

"To secure a balanced recovery, macroeconomic policies need to remain supportive and their effectiveness enhanced. Fiscal policy should stay slightly expansionary, shifting from spending on infrastructure towards strengthening social safety nets and promoting green investment," said Geoffrey Okamoto, the IMF's first deputy managing director.

"The COVID-19 pandemic has inflicted significant human and economic costs on China, but a major containment effort has helped contain the spread of the virus, and macroeconomic and financial policies have mitigated the crisis' impact and quickly returned the economy to growth," according to Okamoto.

The fund also concluded that China can help the international community to overcome several of the major challenges facing the global economy, by supporting international efforts to expand access to a vaccine, providing debt relief to low-income countries and sustainable financing for global infrastructure investment, and tackling climate change.

An IMF team, led by Helge Berger, mission chief for China and assistant director of the Asia and Pacific Department, conducted discussions virtually on the 2020 Article IV Consultation from Oct 26 to Nov 4.

The result came after discussions between IMF officials and senior officials from Chinese government, the People's Bank of China, private sector representatives, and academics to exchange views on economic prospects, reform progress and challenges, and policy responses, the fund said.

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