China rebounded strongly from the pandemic, but growth is losing momentum while remaining overly dependent on support from investment and exports. This imperils the nation’s long-sought transition to sustained high-quality growth that’s balanced, inclusive and green.

While China’s many challenges have no easy answer, the key message of the IMF’s annual Article IV review of the economy is that rebalancing toward a more consumption-based model will boost growth prospects in the short term and deliver high-quality expansion in the long run. Importantly, it will also help bring the country closer to achieving its climate goal of carbon neutrality before 2060.

More immediate economic headwinds include slowing real estate investment and rapid withdrawal of fiscal support. What’s more, new outbreaks of more transmissible virus variants are prompting more lockdowns, weighing on the crucial recovery of private consumption.

While exports have boosted growth during the pandemic, these global tailwinds are poised to unwind eventually, leaving the world’s second-largest economy to contend with serious challenges. One of these is stagnant domestic productivity growth, which has leveled off in the past 10 years just as China’s workforce stopped expanding.

For more details, please click on the original link here.