IMF Raises China’s Growth Outlook but Warns on Need for Structural Reforms
In its periodic review, the IMF raised its 2025 growth forecast for China to 5.0% from 4.8%, and now expects 4.5% growth in 2026.
Quick overview
- The IMF urged China to transition to a consumption-driven growth model to reduce reliance on debt-driven investment and exports.
- China recorded a $1 trillion trade surplus and is projected to contribute 40% of global growth by 2025.
- The IMF raised its growth forecasts for China, expecting 5.0% growth in 2025 and 4.5% in 2026.
- Challenges such as a weak property sector and sluggish domestic demand pose significant obstacles to China's economic growth.
The IMF urged the Asian giant to shift toward a consumption-driven growth model.
The International Monetary Fund (IMF) called on China to accelerate structural reforms and move toward a consumption-led growth model that reins in debt-driven investment and exports.
However, the institution made no direct mention of former President Trump or the tariff war between the world’s second-largest economy and the United States. China, meanwhile, posted a record $1 trillion trade surplus for the first time, and is expected to account for up to 40% of global growth in 2025.
In its periodic review, the IMF raised its 2025 growth forecast for China to 5.0% from 4.8%, and now expects 4.5% growth in 2026, up from 4.2%.
At the same time, it warned that China’s weak property sector, heavily indebted local governments, and sluggish domestic demand remain major obstacles the economy must overcome to sustain growth. Beijing is watching the IMF’s “Article IV” review closely, as an endorsement—or criticism—of its economic management could ease or heighten tensions with key trading partners.
The IMF’s assessment of China’s economy
“China’s large economic footprint and rising global trade tensions make export-dependence a less viable strategy for sustaining robust growth,” the IMF said. “The main policy priority for China is to transition to a consumption-driven growth model, moving away from excessive reliance on exports and investment.”
“This transition will require more urgent and forceful macroeconomic support, reforms to reduce households’ high savings rate, and a scaling back of inefficient investment and unwarranted industrial-policy support,” the global lender added.
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