The International Monetary Fund has upgraded its forecast for China’s economy, while warning that consumer-friendly reforms are needed to sustain strong, high-quality growth. The IMF’s report said the world’s second-largest economy will likely expand at a 5% annual rate this year, based on its growth in the first quarter and recent moves to support the property sector. That is a 0.4 percentage point above its earlier estimate. But it warned that attaining sustained growth requires building stronger social safety nets and increasing workers’ incomes to enable Chinese consumers to spend more. The IMF also said Beijing should scale back subsidies and other “distortive” policies that support manufacturing at the expense of other industries such as services.
The ruling party has set its annual growth target at “around 5%,” and the economy grew at a faster-than-expected 5.3% in the first quarter of the year, boosting the global economy. The IMF said its upgraded forecast also reflects recent moves to boost growth, including fresh help for the property industry such as lower interest rates and smaller down-payment requirements on home loans. Source: AP