China’s pivot towards domestic consumption-driven growth to boost global recovery: IMF chief

WASHINGTON, Feb. 5 (Xinhua) — China’s pivot towards domestic consumption-driven growth with the process of opening up will inject more growth momentum into global economic recovery, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Friday.

“China’s recovery translates into positive spillovers, especially for economies that are connected through commodity exports and other avenues of global integration,” Georgieva told Xinhua at a virtual media roundtable with Washington-based reporters, adding that it’s a positive development for both China and the world.

China was the only major economy to register positive growth in 2020 with a rate of 2.3 percent, but its growth was “still not entirely balanced” because most of it was driven by public investments and other forms of support, Georgieva noted.

“So gearing its growth more towards domestic consumption is something that China will pursue throughout the years, and continuing with the process of opening up, especially in the financial services, will help China inject more growth momentum into the rest of the world,” she said.

According to the latest update to its World Economic Outlook (WEO), the IMF projected China’s economy to grow by 8.1 percent in 2021, amid a partial and uneven global recovery.

“This year we face the risk of great divergence. The path to recovery is uneven,” and that unevenness can translate into substantial problems for the world in the years to come, Georgieva said, noting around 50 percent of developing countries will be diverging rather than converging, facing a risk to fall further behind.

“That would be not only a setback for living standards in these countries, but it would make it so much more difficult to bring stability and security for them and for the rest of the world,” she warned.

The IMF chief stressed that the world faces “massive global challenges” and they do require all countries, including the United States and China, to work together.

“We just spoke about climate … It has to be a collective effort,” Georgieva said, welcoming China’s commitment to striving to achieve carbon neutrality before 2060.

“China also can do a lot in its international engagements to support that same transition to climate resilience and low carbon in the rest of the world,” she said.

As China has emerged as a major world creditor and developed its own vaccines, Georgieva believed that collaboration from China in the areas of debt sustainability and access to vaccines is also very important.

“It is very important that China joined the common framework, and together with everybody else in the G20, to make sure that we can prevent countries from virtually collapsing because of unsustainable debt levels,” she said. 

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