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Speaking at a press briefing after the completion of an annual review of the Chinese economy, David Lipton, the IMF’s first deputy managing director, said, “Reining in total social financing growth is a priority and will require further tightening of prudential oversight as well as, critically, improved investor accountability for their investment decisions.”
The IMF has stressed that China needs to reduce the deficit in the medium term to ensure a robust and sustainable debt profile.
Reforms need to be pushed more stridently, argued Lipton.
“They need continued liberalisation and reduced government involvement [in the economy], allowing a greater role for market forces,” Lipton told reporters.
The IMF’s growth forecast for 2012 for the Chinese economy was lowered from 8 per cent to 7.75 per cent this year due to weak and uncertain global conditions.
The estimate is higher than the Chinese government’s target of 7.5 per cent.
“The pace of the economy should pick up moderately in the second half of the year, as the recent credit expansion gains traction and in line with a projected mild pick-up in the global economy,” Mr Lipton said on Wednesday.
An IMF team visited China from May 25 to 29 to conduct the annual Article IV review of the Chinese economy.
The team held discussions with senior officials from the government, the central bank, financial regulators, private sector representatives and academics to exchange views on the economy and the challenges ahead.
With inputs from Agencies