WASHINGTON — China’s economy slowed to a safer and more sustainable range, marking the transition to its economic “new normal”, said a senior official of the International Monetary Fund (IMF).
In a recent interview with Xinhua, Steven Barnett, a division chief in the Asia and Pacific Department of the IMF, said China’s economic growth which moderated to 7 percent in the first quarter, the slowest pace since 2009, is in line with what IMF expects China’s growth range which stands between 6.5-7 percent.
“We think this marks the transition what in China is being called ‘new normal’. We will call you get on a slower but safer and more sustainable growth path,” he said on the sidelines of the World Bank-IMF Spring Meetings.
In IMF’s biannual World Economic Outlook (WEO) report released on April 14, the Washington-based lender forecast China’s economy would ease to 6.8 percent in 2015 from 7.4 percent in 2014. The growth is expected to cool to 6.3 percent in 2016.
For China, the main risk is the failure to implement the reform agenda to address financial risks, rebalance the economy and tap new sources of growth,” the report warned.
“We see it will continue in a safe range in the end ... How fast China can grow depends on how successful China is in implementing the reform agenda,” Barnett said.
He singled out key areas where reforms should be accelerated, including liberalizing the financial sector, and beefing up the social security system.
“We think China still has policy space to support growth if needed,” he noted, saying one is to accelerate the reduction of social security contributions, and the second relates to strengthening the social security system.
“These will help boost consumption by boosting labor market and income, and accelerate the shift away from investment toward consumption as a driver of growth,” he said.