High level of debt still seen as big challenge
China's GDP growth will reach 6.8 percent in 2017, but the country still needs to deepen its structural reforms and address debt, the IMF said Tuesday.
The world's second-largest economy showed some signs of improvement and gained further momentum in the first half of 2017, according to the IMF World and China Economic Outlook, which was launched on Tuesday in Beijing.
Growth is projected to rise over this year and next in emerging markets, supported by an improved global financial environment as well as by a recovery in advanced economies, the IMF report noted.
Both "hard" and "soft" data, referring to manufacturing activity and consumer confidence, show good signs, and "the recovery is truly broad-based," Alfred Schipke, IMF senior resident representative for China, told the audience during the launch of the report.
China has made progress in rebalancing away from external-led growth, noted Zhang Longmei, an economist with the IMF Asia and Pacific Department. "And it is moving toward a more service-dominated economy," she said.
Major economic indicators have been showing a pickup in activity since the beginning of this year, and the GDP growth rate is projected to be within a range from 6.7 to 6.9 percent, Qiu Xiaohua, chief economist at Minsheng Securities, said during the event.
"Other positive signs include the global recovery and new political transition, which are all driving the Chinese economy toward an upward growth track," he said.
The country's GDP growth reached 6.9 percent in the first three quarters, with the services sector seeing the fastest increase, according to data released by the National Bureau of Statistics on October 20.
"It shows that the restructuring has been further improved and the quality has been enhanced, and new industries such as high-tech and online retail are booming," said Xing Zhihong, spokesman for the NBS, when the latest data was unveiled.
However, the IMF pointed out in the report some major obstacles to growth momentum that China is still facing. The main challenge remains excessive debt, and credit for the real economy has also slowed marginally, Zhang remarked.
For example, the household debt in China has surpassed the average level of emerging economies such as Brazil and India, and credit intensity has been rising over the past five years, according to the IMF.
The fund suggested that China's structural reforms should deal with some key issues including large and rising State-owned enterprises, complexity and fragility in the financial sector and high corporate debt.
