IMF Calls for China to Pivot Toward Consumer-Led Growth

(MENAFN) The International Monetary Fund stated late Wednesday that transitioning to a consumption-oriented growth strategy should stand as a central objective for China. The institution encouraged policymakers to introduce structural reforms aimed at rebalancing the economy in favor of domestic demand and decreasing dependence on overseas sales.

"China’s economy has proved resilient in the face of multiple shocks, boosted by robust exports and fiscal stimulus, and it remains a major driver of global growth. The economy expanded by 5% in 2025, and we project 4.5% growth this year, up 0.3 percentage points from our October forecast," the fund said in a statement.

Despite this resilience, the IMF emphasized that the development framework of the world’s second-largest economy is confronting increasing strain. Internal demand has stayed subdued, largely due to a sustained slump in the real estate market and an insufficient social welfare system, both of which have undermined household confidence and expenditure.

According to the statement, relatively low inflation compared with key trading partners has triggered a weakening in the real exchange rate. This shift has supported vigorous export performance and contributed to a current account surplus projected to climb to 3.3% of gross domestic product.

The fund further observed that price growth is anticipated to rise only incrementally, with deflationary forces likely to linger. Over the medium term, economic expansion is forecast to gradually moderate, weighed down by a shrinking workforce, diminishing investment returns, and a deceleration in productivity gains.

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