More consumption in the People’s Republic
IMF head promotes China’s realignment
March 24, 2024, 3:52 p.m
Listen to article
This audio version was artificially generated. More info | Send feedback
The Chinese economy is in danger of stagnating as several companies are heavily indebted and have to file for bankruptcy. The head of the International Monetary Fund warns the country that economic output can only grow with an economic reorientation.
According to the head of the International Monetary Fund (IMF), Kristalina Georgieva, China needs to reinvent itself economically. Solutions to the crisis in the real estate market as well as greater consumption and higher productivity in the country are needed, Georgieva said in a speech to high-ranking government officials and company managers. “China faces a fork in the road.” The People’s Republic could rely on old recipes that worked in the past or reinvent itself and thus usher in a new era.
Despite this, the government representatives who opened the Chinese Development Forum were confident and announced that China could still achieve its economic goals this year. This includes a steady growth rate of around five percent. In addition, strategically important economic sectors should continue to receive state support.
Georgieva referred to studies by the IMF, according to which China’s economic output could increase by more than 3.5 trillion US dollars over the next 15 years through a stronger focus on consumption. For this to succeed, China must take decisive steps. This included rapid completion of paused construction projects by insolvent companies, but also reducing the risk of local governments becoming heavily indebted. Consumers need greater purchasing power. We need to work on this, said the IMF boss.