International Monetary Fund (IMF) Managing Director Kristalina Georgieva reiterated the IMF’s stance on China’s economic challenges, urging the country to shift from its export-led growth model to one more focused on domestic consumption and services.
Speaking at the Milken Institute Global Conference in Los Angeles on Monday, Georgieva responded to a call from U.S. Treasury Secretary Scott Bessent for the IMF to refocus on its core mission of ensuring global economic stability. She emphasized that the IMF has long been advocating for China to address several key issues impacting both its domestic and international economic standing.
“For quite some time, we have been vocal that China must address four main challenges,” Georgieva said. “These include shifting from export-driven growth to more consumption-based growth, addressing the property sector’s issues, promoting services as a driver for growth, and reducing the role of the state in the economy.”
She acknowledged, however, that reducing China’s state sector would likely remain a long-term challenge.
Bessent, during the IMF and World Bank Spring Meetings last month, had urged the institutions to return to their fundamental roles, focusing on economic stability and development. He also called on the IMF to hold countries like China accountable for “globally distortive policies” and “opaque currency practices.”
Georgieva further noted that China could face deflationary pressures due to a decline in U.S. demand for its exports, exacerbated by tariffs imposed during the Trump administration. She also mentioned that reduced European demand could help moderate inflation in the region, while the U.S. faces supply shocks that could fuel inflationary pressures.
