(Dec 10): The International Monetary Fund (IMF) upgraded forecasts for China’s growth and called for a “more forceful policy package” from Beijing to make its economy less dependent on exports and investment.
In a short conclusion to its Article IV mission, the IMF said it now expects China’s economy to expand 5% in 2025 and 4.5% in 2026 — faster than in its most recent projections from October. Looking ahead, “long-standing structural challenges” risk becoming a drag on growth, according to a statement issued on Wednesday.
“Despite resilient growth, imbalances remain significant amid weak domestic demand and deflationary pressures,” it said. “The key policy priority is to transition to a consumption-led growth model.”
The IMF is adding to arguments for bolder action on China’s part to embrace a growth model driven more by domestic demand. China needed just 11 months to accumulate a record trade surplus of over US$1 trillion this year, risking a backlash from markets flooded by goods from the world’s biggest manufacturing nation.
“China’s large economic size and heightened global trade tensions make reliance on exports less viable for sustaining robust growth,” Sonali Jain-Chandra, the IMF’s mission chief for China, said in the statement. “Low inflation relative to trading partners has led to real exchange rate depreciation, contributing to strong exports and supporting growth.”
As a result, external imbalances are becoming more pronounced, according to the IMF, with China’s current account surplus projected to reach 3.3% of gross domestic product in 2025.
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Earlier in 2025, the IMF estimated that the yuan was 8.5% undervalued, based on a current account surplus of 2.3% of GDP last year. The surplus reached 3.4% in the third quarter of this year, the highest since late 2010, according to Bloomberg calculations.
While offering praise for efforts being made by the authorities to bolster consumption as a driver of growth, the IMF called for acting “with greater urgency” in several key areas.
Jain-Chandra said that includes “tackling imbalances through more expansionary macroeconomic policies and complementary reforms to lower excessive household savings.”
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The IMF also called on Beijing to carry out “sustained fiscal consolidation” over the medium term, after the deflationary cycle passes, to stabilise government debt.
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