IMF advises changing rigid growth targets to flexible projections

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The International Monetary Fund (IMF) believes that China ought to put less emphasis on a growth target but focus more on the right policies, which should lead to growth, rather than eyeing a target and then devising a way to get there.

Alfred Schipke, IMF's Senior Resident Representative for China, said that in striving to reach a particular growth target, nations often have to provide credit, leading to debt build-up and financial vulnerabilities.

Reuters Photo.‍

“The first step would be to move from calling it a target to maybe call it a projection,” said Schipke.

The IMF has adjusted China’s 2017 growth forecast several times to 6.8 percent, higher than its original estimate of 6.2 percent, but the organization thinks it is time for China to stop focusing too much on a GDP growth target.

Schipke also told CGTN that since the world economy is improving, China should be able to accelerate its reforms.

His comments come as China’s Central Economic Work Conference kicked off in Beijing on Monday. The conference will discuss and summarize China’s economic achievements in 2017 and what will be done in 2018.

“Reforms have advanced in the financial sector. It is important that the tightening which has taken place, will be maintained, and that the regulatory framework and crisis management will be enhanced," said Schipke, also stating that the IMF welcomed China's prioritizing of state-owned enterprise reforms.

In addition to reforms and new measurements for China to set economic goals, Schipke also pointed out that the central-regional government relationship is also critical to getting regional debt levels under control. Regional governments are becoming one of the biggest debtors in China. In the first 11 months of this year, the regional debt level reached 4.31 trillion yuan.