IMF: China’s bonds, stimulus will buoy world’s No 2 economy despite property crisis
- Asia official with Washington-based agency points to PBOC’s policy moves, as well as China’s infrastructure spending, as economic bellwethers
- But years-long property crisis, local-level government debt and overcapacity remain high hurdles to overcome
Lavish bond issuances and financing for local governments should keep the US$18 trillion Chinese economy stable this year despite a festering property crisis, an IMF Asia official said on Thursday.
Shockwaves from shifts in the world’s second-largest economy have rapidly rippled into other countries, from Southeast Asia to the West, where companies trade with China or invest in manufacturing for exports or in the giant domestic market.
To that end, the Washington-based International Monetary Fund also warned this week about knock-on effects from China’s export prices and increases in capacity.
Beijing’s monetary and fiscal policy support, including two pledges to issue bonds, will keep the broad economy humming this year, said Thomas Helbling, deputy director of the IMF’s Asia and Pacific Department. He also pointed to infrastructure spending.
Fiscal support refers to government spending, while monetary support covers interest rates and banking regulations.