China’s Economic Growth Projected at 7.9% in 2021

The International Monetary Fund (IMF) projected China’s economic growth in 2021 at 7.9% after concluding the annual Article IV review of the Chinese economy.

“The Chinese economy continues its fast recovery from the pandemic, helped by a strong containment effort and swift policy actions to mitigate the impact of the crisis,” the executive board of the IMF said in a statement.

“Policymakers have provided financial relief and fiscal support to protect the most-affected firms while safeguarding financial stability,” the IMF’s executive board said, adding macroeconomic and financial policies have supported the economic recovery.

IMF executive directors called for a continuation of the “moderately supportive” fiscal and monetary policies until China’s recovery is on solid ground.

As the recovery takes hold, the temporary measures supporting the financial sector should be replaced with policies to address problem loans and strengthen regulatory and supervisory frameworks, said the executive directors.

“Structural reform will be key to boosting potential growth, reduce external imbalances, and build a more resilient, green, and inclusive economy,” they said.

“We’re assuming under our baseline forecast the main driver of (China’s economic) growth this year will be private consumption,” Helge Berger, the IMF’s China mission chief and assistant director in the Asia and Pacific Department, told Xinhua on Friday at a press briefing.

China’s recovery so far has been proceeding “more rapidly than expected,” and also supported by stronger-than-expected release of pent-up demand, said World Bank Acting Vice President for Equitable Growth and Financial Institutions Ayhan Kose.

“As the Chinese economy continues to steadily recover from the COVID-19 shock, the authorities remain committed to pursuing prudent policies that will foster sustainable and high-quality growth going forward,” Jin Zhongxia, IMF executive director for China, told Xinhua.

Citing the signing of the Regional Comprehensive Economic Partnership (RCEP) free trade agreement and the completion of bilateral investment agreement negotiations with the European Union (EU), Jin believed that China will continue to expand global economic linkages and cooperation to enhance its economic efficiency and resilience.