China’s economy is going through a transition to a slower and more sustainable growth, and the International Monetary Fund (IMF) does not expect a hard landing in its economy, said the IMF chief on Feb 4.
“China is going through that massive, multi-faceted transition and we do not expect a hard landing of China as has been talked about for many years,” IMF Managing Director Christine Lagarde said in an online media briefing.
Despite difficulties and volatility, Lagarde said, China could manage the growth transition without a hard landing. In addition, she called on China to continue to push forward market-oriented reforms, such as the reforms on state-owned enterprises.
Earlier in the day, the IMF chief said in a speech at the University of Maryland that China’s slower growth in the short term could have spillover effects through trade and lower demand for commodities, but in the long run China’s rebalancing from investment to services and domestic consumption will lead to more sustainable growth and benefit both China and the world.
In the speech, she also highlighted the key challenges facing the emerging economies, including slower growth in China, falling commodities prices and diverging monetary policies between the United States and the other major central banks.
Lagarde said she anticipated increased demand from emerging markets for financial support from the IMF and other multilateral institutions as they struggle with these challenges.
In order to ensure safer capital flows, she called on emerging markets to enhance the resilience of their financial systems by adopting stronger macro-prudential policies, and the advanced economies to enhance supervisory framework to monitor short-term debt-creating flows.
Lagarde also called for building a stronger global financial safety net to enable access to financial resources in times of crisis or distress.