Opening Remarks: 2025 China Article IV Consultation Press Conference
This press briefing presents IMF staff’s key findings from the 2025 Article IV consultation with China—our annual check-in on the economy’s health.
Over the last couple of weeks, our team held constructive, in-depth discussions with Chinese authorities. We sincerely appreciate their cooperation and openness.
To begin, here is our refreshed view of the outlook. Despite sizable shocks, China’s economy has demonstrated notable resilience.
We have nudged up our growth projections for China to 5 percent in 2025 and 4.5 percent in 2026, marking increases of 0.2 and 0.3 percentage points from our October World Economic Outlook. These revisions reflect a combination of solid export performance and supportive fiscal measures. This momentum has buoyed household incomes, which is particularly meaningful when consumer confidence remains fragile. China now accounts for about 30 percent of global growth.
This positive outlook creates a favorable backdrop for the authorities as they confront the economy’s significant and urgent challenges. The authorities acknowledge these challenges and are taking steps in the right direction. We encourage them to accelerate efforts with greater urgency.
Here are the key details.
Domestic demand in China has remained weak, partly due to ongoing fragility in the property sector. This has dampened consumer confidence, contributing to weak domestic consumption and deflationary pressures.
Inflation remains low relative to trading partners, which has driven a notable real depreciation of the exchange rate. While this has made Chinese goods cheaper abroad, it has also prolonged a heavy reliance on exports and worsened external imbalances.
As the world’s second-largest economy, China cannot rely on exports alone for meaningful growth. A continued emphasis on export-led expansion risks intensifying global trade frictions.
Compounding these issues are slower productivity growth, high corporate and public debt, diminishing returns on investment, and an aging population. Taken together, these factors suggest slower growth ahead.
In response, the 15th Five Year Plan prioritizes boosting consumption as a growth engine and signaling a shift from goods to services. We view this pivot as a central, positive strategic move for China.
Authorities are already taking steps to elevate domestic consumption. They have implemented an expansionary fiscal stance, loosened monetary policy, and introduced targeted measures to curb excess saving and address internal frictions. Measures such as gradually increasing the retirement age, expanding subsidies for elder care and childcare, and supporting the services sector are steps in the right direction.
Nevertheless, more is required.
During our discussions, we recommended stronger, more urgent actions in three main areas.
First: tackle domestic imbalances and deflationary pressures. This calls for an even more expansionary macroeconomic policy mix, paired with reforms to reduce excess saving.
We advocate for a comprehensive policy package that combines additional fiscal stimulus with further monetary easing and greater flexibility in the exchange rate.
Fiscal policy should prioritize shoring up social protection to give households the confidence to spend more and save less. Our analysis suggests that increasing social spending, particularly in rural areas, and accelerating Hukou reforms that grant migrant workers access to social benefits could lift consumption by up to 3 percent of GDP in the medium term.
At the same time, scaled-back public investment and streamlined industrial policies would boost productivity by improving resource allocation and allowing market forces to lead. Cutting back on broad industrial policy support could generate fiscal savings that could be redirected toward social spending and addressing property-sector weaknesses.
Ultimately, boosting consumption would unlock the potential of China’s vast domestic market, reducing both internal and external imbalances and creating a more durable growth path.
Second: implement structural reforms to lift medium-term growth. We urge reducing regulatory burdens, easing barriers to internal trade—especially in services—and leveling the playing field for firms. Labor-market measures to reduce skill mismatches and youth unemployment are essential as well.
These reforms would help harness the benefits of new technologies, including artificial intelligence and improved energy efficiency. China’s digital infrastructure is well-positioned to benefit from AI, but policymakers should mitigate labor-market disruptions and guard against new financial stability risks.
Third: address high levels of domestic debt. Decades of heavy investment have left China with substantial public and corporate debt, creating elevated risks. The debt swap program provides short-term relief by lowering financing pressures, but long-term costs will rise if local government debt remains unsustainable. This should be paired with reforms to strengthen financial oversight and to promote fiscal discipline and transparency.
What would this yield? Making tangible progress on these three priorities could raise China’s GDP by about 2.5 percent by 2030, generate roughly 18 million new jobs, and relieve deflationary pressures. It would also help align the real exchange rate and reduce the current account surplus.
A more balanced economy—both domestically and externally—would also contribute to a stronger, healthier global economy.
In summary, China stands at an opportunity to transition to a new phase of development, moving from a growth model dominated by investment and exports toward one driven by domestic consumption and services. Seizing this opportunity will require bold policy choices and determined action.
We look forward to continuing our close collaboration with the authorities as they pursue a more balanced and inclusive economy.
Thank you.
