Short-term target focus puts Chinaâ€™s mid-term growth at risk: IMF
The International Monetary Fund (IMF) said that China's short-term growth viewpoint has strengthened but there is rising risk of a sharp medium-term change due to dependence on stimulus to meet targets and a credit-expansion track that may be risky.
Raising its prediction for China's average yearly growth from 2018-2020 to 6.4% from 6.0% and the IMF said that now there is a greater chance that authorities will bump into their target of doubling 2010 real GDP by 2020. Nevertheless, the IMF warned of the consequences to long-term economic strength.
In its annual review of China's economy, the IMF said that the key cost of robust growth is further large upsurges in private and public debt.
The report said, "Global experience proposes that China's present credit trajectory is unsafe with growing risks of a troublesome adjustment and/or a marked growth slowdown”.
As per the estimation done by International Monetary Fund, China’s economy would have grown about 5.5% yearly from 2012-2016 if credit was prolonged at a sustainable speed, compared to the average 7.25% that it recorded.