The head of the International Monetary Fund (IMF), Kristalina Georgieva, today hailed China’s strong contribution to global growth in 2023, but urged Beijing to rebalance its economy towards consumption.
The IMF expects the Asian giant’s Gross Domestic Product (GDP) to grow by 5.2% this year, a performance made possible by the gradual normalization of activity following the lifting of anti-covid restrictions in the country in December.
“This strong recovery means that China is expected to account for around a third of global growth in 2023, which will provide a welcome boost to the world economy,” said Kristalina Georgieva, speaking at a forum in Beijing.
However, Kristalina Georgieva called on China “to increase productivity and rebalance the economy, moving it away from investment towards more consumption-oriented growth”.
Georgieva said this was more sustainable, less dependent on debt and would help address climate challenges.
“To achieve this, the social protection system should play a central role, increasing health and unemployment benefits to cushion domestic shocks,” she argued.
Social protection in China has been rising for several decades as the country has become richer, but it is not at the level of more advanced economies.
Kristalina Georgieva also called for “reforms” to “level the playing field between the private sector and state-owned enterprises”, the latter traditionally favored by the state.
These rebalancing measures could lead to a reduction in carbon dioxide emissions of around 15% in three decades, defended the official.
“This would translate into benefits for the whole world: a 4.5% drop in global emissions over the same period,” she said.
Like other countries, China is vulnerable to extreme weather events, which are becoming more frequent with climate change.
The Asian giant was hit last year by a severe drought that reduced hydroelectric power output and led to power cuts.
“The majority of the country’s carbon dioxide emissions are generated by the energy and industrial sectors,” said Kristalina Georgieva.
“The shift to consumption-driven growth will therefore reduce energy demand and alleviate pressures on energy security.”
