The IMF released their summary of the 2017 Article IV Consultation with China on Tuesday, broadly commending authorities’ progress rebalancing the economy, noting that economic activity has firmed, opening a window to accelerate reforms.
- Reduce national savings to prevent domestic and internal imbalances; China needs greater social spending, more progressive tax system
- State-owned enterprises need further reforms, including hardening budget constraints, accelerating restructuring of debt, allowing exit of non-viable firms
- Gradual tightening of monetary policy should core inflation continue upward trend
- Continued progress toward greater exchange rate flexibility of the yuan