Ankara: The International Monetary Fund (IMF) said Wednesday that China's vast economic size, combined with rising global trade tensions, makes it relying on exports less viable for long-term growth. "Long-standing structural challenges will also weigh on the economy over the medium term. Growth is expected to moderate due to slowing productivity growth, an aging population, elevated debt levels, and decreasing returns to investment," it said in a statement.
According to Anadolu Agency, the IMF noted that China's economy has shown resilience despite facing multiple shocks in recent years, with expected growth of 5% in 2025 and 4.5% in 2026. These figures reflect upward revisions of 0.2 and 0.3 percentage points, respectively, from the IMF's October World Economic Outlook, driven by recently announced policy measures and reduced US-China bilateral tariffs. Headline inflation is projected to rise modestly from an average of 0% in 2025 to 0.8% in 2026.
The IMF emphasized that persistent imbalances are testing the economy's resilience. Weak domestic demand and deflationary pressures have resulted from the protracted property sector adjustment, spillovers to local government finances, and muted consumer confidence. The authorities recognize the need to increase consumption as a growth driver and have implemented policy measures to this end.
These measures include expansionary fiscal policy, monetary easing, and targeted actions to support consumption and the property sector. The IMF staff agrees that transitioning to a consumption-led growth model is a key policy priority for China, moving away from overreliance on exports and investment.
The IMF recommends three strategies for a consumption-led growth model: addressing imbalances through expansionary macroeconomic policies and reforms to lower excessive household savings; ensuring macro-financial stability and tackling debt vulnerabilities through fiscal and financial framework reforms and balance sheet cleanup; and making structural reforms to counter headwinds from slowing productivity and a shrinking labor force.
Progress on these policy priorities could lift China's GDP by about 2.5 percentage points by 2030 and reduce external imbalances. This would not only enhance living standards and prosperity in China but also contribute to a stronger and healthier global economy.