By Andualem Sisay Gessesse (Marrakech, Morocco) – The International Monetary Fund (IMF) advices China to change its development model from export oriented to domestic market, from investment to consumption, and from infrastructure investment to innovation.
“In our view the course China has to take should be informed by consideration of growth, stability, and innovation. Why growth stability and innovation? Growth: China has been extremely successful in terms of its growth model which has delivered a run of growth for more than 40 years which is one of the best runs of growth on economic record. But in that context China has become a very large economy in the world. It has become one of the two largest economies in the world,” said
“So, the IMF has been saying for many years that the growth model in China has to change. It has to change from exports to domestic demand; it has to pivot from investment to consumption; and innovations; and very importantly it has to pivot from investment in infrastructure and real estate to investment in innovation,” he said at a press conference in Marrakech, Morocco this morning on the sidelines of the annual meetings of the IMF/World Bank.
He stated that the current property and real estate challenges in China call for very significant restructuring. “From the view point of public finances that affect local public finances. So a reconsideration of the fiscal relations inside China’s public administrations is a very important priority…When it comes to innovation the magnitude of these two of the challenge, it encompasses the need for innovation in services; you can think about health, education, you can think about spread of digital technology in the Chinese society,” he said.