IMF: China's Growth Rate to Reach 7 Percent in 2002

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Last updated at: (Beijing Time) Friday, April 19, 2002

IMF: China's Growth Rate to Reach 7 Percent in 2002

The International Monetary Fund (IMF) predicted on Thursday that growth rate in China would be about 7 percent in 2002 and 7.4 percent in 2003. The IMF pointed out that ongoing progress with economic structural readmustments and handling rising fiscal challenges will be the key to sustaining strong medium-term growth in China.

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The International Monetary Fund (IMF) predicted on Thursday that growth rate in China would be about 7 percent in 2002 and 7.4 percent in 2003.

In the World Economic Outlook released on the eve of the 2002 spring meetings of the IMF and the World Bank, the IMF said the recent easing of monetary policy in China is appropriate, especially as the deflationary pressure has reemerged and the real interest rate edging up.

The IMF said China's economic growth rate would be supported by robust domestic demand.

However, external demand will continue to contribute negatively to the growth as China's recent entry to the World Trade Organization (WTO) will boost imports, especially of capital goods, more rapidly than the global recovery will increase China's exports.

Reform priorities in China

The IMF pointed out that ongoing progress with structural readjustment and meeting rising fiscal challenges will be the key to sustaining strong medium-term growth in China.

"The stronger competition that is likely to arise from WTO membership will increase pressure upon reforming such sectors as agriculture, manufacturing, and banking," the IMF said.

The IMF said reform priorities in China include the intertwined issues of restructuring the state-owned enterprises, reforming the banking industry -- especially addressing the substantial non-performing loans in the State-owned commercial banks -- and redesigning the pension system.

The capacity of the new asset management companies to dispose of their purchased assets effectively also needs to be enhanced, the IMF said.

To reduce the ratio of non-performing assets of the State-owned banks, Chinese central government has specially designed several asset management firms to take over the bad debts, hoping to revitalize them through a certain kind of capital operation.

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