China's recent slowdown not hard landing: IMF expert
Updated: 2013-07-18 13:33
In the report released on Wednesday, the IMF said the Chinese economy is expected to grow by 7.8 percent this year despite a moderate slowdown during the first half, with resilient domestic demand offsetting lingering weakness in the external environment.
"Accelerating the transformation of the growth model remains the main priority, as reaffirmed in recent policy announcements by the new administration," said the IMF.
Rodlauer said China has to manage all its internal problems in a global environment that is continuing to be difficult, one of the challenges China has faced over the past several years.
He said China has achieved decades of rapid growth through urbanization and more integration into the global economy, and now the investment-boosted and export-led growth model, which helped China resist shocks from the crisis, is coming to its limits.
"That very high rate of growth pushed forward by investment and exports simply can't happen anymore," he said, noting a gradual shift toward the path based more on domestic demand is needed.
In this case, pain is unavoidable as China breaks away from the old growth model and slowdown is part of the cost of the reform, he added.
For China, the near-term challenge is to maintain stability and avoid sharp fluctuations. In the medium term, the main task is to rebalance the economy, which has been prioritized by the government.
In order to move forward the transformation, China needs to increase household income, improve social security system and reform the financial sector while making the growth more environment-friendly and inclusive.
"We are very confident that China's economy is not in the process of a hard landing. We see the economy continuing to glide into a sustainable path going forward," Rodlauer said, stressing that more work is needed to make sure the economy continues to glide safely and steadily forward.
Rodlauer said the IMF does see continuous progress made in China's domestic rebalancing and a lot of things are going in the right direction.
Particularly, actions have been taken in the financial sector to better regulate the system and improve the transparency in the shadow banking sector, he said.
"We do see the actions to contain risks," he continued, adding that he expects the Chinese government to outline more concrete steps to further advance the reforms.