IMF urges China to ‘recalibrate’ coronavirus policy, aid vulnerable households amid shaky external environment
- The International Monetary Fund (IMF) says China should cut interest rates and ease strict coronavirus curbs for a much-needed economic recovery
- The IMF’s annual health check of the Chinese economy identified the Covid-19 pandemic, a slumping property market and external demand as major risks
China should consider cutting interest rates and offering more fiscal support to vulnerable households as the country needs a solid domestic recovery next year to offset a deteriorating external environment, a senior official with the International Monetary Fund (IMF) said on Wednesday.
The country also needs a “recalibration” of its zero-Covid strategy to bring the world’s second largest economy back on track, while relying on market reforms to raise productivity and deliver medium- and long-term growth, according to Gita Gopinath, first deputy managing director of the Washington-based organisation.
The suggestions come as the IMF makes public the results of its annual health check of the Chinese economy and financial system, which were made under the Article Four consultation mechanism in early November.
We see a role for long-term policy being accommodative, and that could come about through interest rate cuts
Unlike most other countries, however, China does not have an inflation problem, Gopinath told the Post in an interview on the publication of the Article Four review.