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![The IMF report the need for decisive action to tackle China's “systemic corporate debt problem” [Xinhua]](http://thebricspost.com/wp-content/uploads/2016/04/250960968_81.jpg)
The IMF report stressed the need for decisive action to tackle China’s “systemic corporate debt problem” [Xinhua]
“We have a positive view of China’s growth outlook as China continues to mobilize its very considerable resources and catches up with higher-income economies,” said James Daniel, IMF mission chief for China.
“Many countries could only dream of achieving growth rates that China has and is likely to achieve, which also reflects positively on the reforms that Chinese policymakers have undertaken,” said Daniel.
However, China’s reliance on credit growth, in particular, clouds the country’s outlook, he warned.
Despite the relatively benign near-term outlook, downside risks dominate, including rapid credit growth and slow progress on reform, said the IMF.
In order to reduce vulnerability, China’s policy priority is to slow credit growth, which can be done by tackling its root causes: soft budget constraints on state-owned enterprises and local governments, and the implicit government guarantees and excessive risk taking in parts of the financial sector, said Daniel.
According to the IMF report, Chinese authorities agreed that China’s corporate debt has risen excessively. But they pointed out that China’s large pool of domestic savings, ample banking system buffers, and ongoing equity market development would facilitate a smooth adjustment.
Industrial production rose 6 per cent from a year earlier in July, the National Bureau of Statistics said Friday.
Retail sales climbed 10.2 per cent last month, while fixed-asset investment increased 8.1 per cent in the first seven months of the year.
Source: Agencies
