NewChina should opt for more appropriate economic indicators, says IMF representative
Alfred Schipke suggest move away from quantitive targets to economic projections and greater attention to ‘soft’ infrastructure
China should shift away from quantitative targets in favour of economic projections, and turn more attention to building so-called soft infrastructure to guide the functioning of the markets, the International Monetary Fund (IMF)’s China representative said in Beijing yesterday.
The country was now at a “critical juncture” in its economic transformation as old drivers returned last year to ensure its annual growth target, said Alfred Schipke, the IMF’s senior resident representative to China.
Smog is a good indicator of such a credit-financed and construction-focused investment model, which the IMF believes is unsustainable in the long run.
“If you continue with the model, your debt level continues to rise, then the risks of a hard landing in the future also rise,” said the co-author of the just published book Modernizing China – Investing in Soft Infrastructure, inwhich he urges China to step up systematic reforms when economic growth remained the “fairly ok” range of 6 per cent to 6.5 per cent.
China largely returned 6.7 per cent growth last year, while most institutions estimate an increase of about 6.5 per cent in 2017. The Washington-based fund updated China’s 2016 growth forecast to 6.6 per cent from 6.3 per cent early in 2016 in this year’s World Economic Outlook to be released tomorrow.