IMF: China rebound a boon for entire globe

The strong rebound of the Chinese economy is a boon to global growth, the International Monetary Fund chief said as she cautioned global policymakers against the risk of supply chain insecurity leading to a new Cold War.

The IMF, in its World Economic Outlook released on Tuesday, forecast China's growth to stay at 5.2 percent this year, a 0.8 percentage point upward revision to its October projection, as it said the world is experiencing a "rocky recovery".

"We have been pleased to see this rebound of China not only for China, of course for China, but also because of China's role in the world economy," IMF Managing Director Kristalina Georgieva told a news conference on Thursday at the IMF and World Bank spring meetings that run through Sunday.

"China this year is going to contribute about one-third of global growth. We calculated that 1 percent more growth in China translates into 0.3 percent more growth for the economies that are connected to China," the IMF chief said.

Yi Gang, governor of the People's Bank of China, the nation's central bank, also told G20 finance ministers and central bank governors during the spring meetings that China is expected to achieve GDP growth of around 5 percent this year.

The Chinese economy is stabilizing and recovering with moderate inflation and "positive changes" in the real estate market, Yi said.

The country is willing to implement a common debt treatment framework with all relevant stakeholders, the PBOC quoted Yi as saying in a statement on Friday.

Georgieva, who met Premier Li Qiang during her visit to China at the end of last month, said she was encouraged to hear from the Chinese leadership a commitment to constructively engage and to do its part for the countries that are pressed to restructure their debts.

Georgieva warned global policymakers not to let supply chain security precipitate a new Cold War, as security of supplies and the reliable functioning of global supply chains are taking a "new, higher priority seat" in economic discussions following the COVID-19 pandemic and amid the ongoing conflict in Ukraine.

"The question is, can we be more determined to enhance security of supplies but not push the world that far that we are into a second Cold War?" she said. "I believe it is possible."

Georgieva said that trade fragmentation resulting from the rising geopolitical tensions could increase financial stability risks, potentially reducing global economic output by between 0.2 percent and 7 percent.

"If we fail to be more rational, then people everywhere would be worse off. The middle class in each country would pay a price," Georgieva said.