IMF Warns China on Reforms and Credit Control

China needs to make a “decisive push” to launch new market-oriented reforms and has to control rapid credit growth that could lead to financial problems, the International Monetary Fund said Wednesday.

The fund trimmed its growth forecast for China this year from 8 percent to 7.75 percent due to weaker global demand but said the Chinese economy should remain robust.

President Xi Jinping and other leaders who took power in November have promised to make China’s economy more productive but have yet to disclose details. The World Bank and other advisers say Beijing urgently needs to curb the dominance of state companies and promote free-market competition or growth will decline sharply.

In meetings with visiting IMF officials, Chinese leaders emphasized their desire to nurture “more balanced, inclusive” growth, said David Lipton, a deputy IMF managing director.

“They need continued liberalization and reduced government involvement (in the economy), allowing a greater role for market forces,” Lipton told reporters.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza