China hurting world growth, IMF urges Beijing to change strategy

Beijing (The Uttam Hindu): The International Monetary Fund (IMF) has issued a stern warning to China regarding its economic policies. The global body stated that current policies are not only harming China's economy but also negatively impacting other countries. The IMF urged China to shift its strategy and adopt a growth model based on domestic consumer spending.

The warning was issued in a report released by the International Monetary Fund (IMF). The IMF's executive directors issued the statement during their annual review of the Chinese economy on February 18, Bloomberg reported. The review expressed concern about China's large current account surplus, which is adversely affecting its trading partners.

The IMF stated that China's surplus remains large. The weakening yuan (renminbi) is benefiting Chinese exports, but domestic demand is weakening and imports are declining. Rising deflation is also cited as a concern for China.

Previously, economists at Goldman Sachs also warned about the global impact of China's economic policies. An analysis released last November stated that China's growing export capacity could have a negative impact on the global economy. Now, the IMF has also raised this issue prominently.

According to the report, the IMF stated that China's current policies are squandering resources within the country and exacerbating imbalances abroad. The organization advised Beijing to adopt a growth model based on domestic consumption and reduce its reliance on exports.

However, Zhang Zhengxin, China's representative on the IMF board, dismissed these criticisms, saying that China's export growth in 2025 was primarily driven by its competitiveness and innovation capabilities.