WASHINGTON (Reuters) – The International Monetary Fund on Wednesday urged China to boost COVID-19 vaccination rates and provide Stronger support for its struggling real estate sector to restore confidence and reduce risks from a slowing global economy and high energy prices.
The IMF said in a statement following its virtual meeting of its annual review of China’s economic policies that it left unchanged its GDP growth forecast issued in October. Assuming China phases out its strict zero-COVID strategy in the second half of next year, these guys expect 2022 and 4.4% growth of 3.2% and 4.4%, respectively.
“While the Zero COVID strategy has become more flexible over time, the combination of more contagious COVID variants and persistent gaps in vaccination has led to the need for more frequent lockdowns , putting pressure on consumption and private investment, including housing,” IMF First Deputy Managing Director Gita Gopinath said in a statement. Keep it high to ensure that protections are preserved,” Gopinath added.
The IMF said economic risks to China were skewed to the downside due to a slowing global economy, higher energy prices and Headwinds from tightening global financial conditions.
The IMF said that in the longer term, heightened geopolitical tensions could fragment the global economy, with China facing potential financial decoupling and trade, foreign direct Constraints on investment and technology access.
IMF advises that China’s fiscal policy should remain neutral in after strong support this year, But should protect the recovery and facilitate rebalancing toward more domestic consumption. It said China’s monetary policy should remain accommodative and rely on interest rate-based measures.
Real estate support
The fund lauded the authorities’ recent support measures for China’s sluggish property sector, including a loan scheme to help complete unfinished homes and allow forbenefit loans on problematic properties.
” Building on these efforts, more robust and well-funded mechanisms are needed to complete problematic unfinished projects and protect new project pre-sale buyers from the risk of unfinished projects, while moratoriums should be phased out,” Gopinath said.
“These measures will help restore homebuyer confidence and facilitate market-based restructuring,” she said, adding that in the medium term, the Structural reforms in the sector and new saving models can help shift the market to a more sustainable size.
The IMF also updated its long-standing call for more market-based reforms in China, Including ensuring “competitive neutrality” between private and state-owned enterprises.