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IMF warns of credit, asset boom in China

Reporter: Yang Chengxi 丨 CCTV.com

09-26-2016 16:31 BJT

The International Monetary Fund says in a fresh report that China's short-term economic prospects have improved. The report released Monday attributes part of China's improvement to a pick up in the country's real estate sector. However, the agency also warned against the accompanying risks.

The International Monetary Fund report reaffirms long standing trends in the Chinese economy. One trend is a wide disparity in regional growth disparity. Another is that growth in the services sector is outpacing industrial expansion. The IMF said China's contributions to world growth would remain strong.

Such expansion is not without its problems. The IMF said a rapid increase in credit and corporate debt would likely jeopardize growth in the future, if not managed well.

The report also expressed concern with a recent boom in assets, especially in the real estate sector in China's first-tier cities. Rising home prices have dominated Chinese headlines in recent weeks.

The IMF said China has sufficient buffer to guard against credit risks and asset booms. But going forward the country faces a choice between reform and growth.

The agency's report said it sees reform approaches that address such issues in China's 13th five year plan, which could sacrifice short term growth speed for long term growth potentials. Going forward, implementation will be key.

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