IMF warns China against aggressive economic stimulus

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IMF warns China against aggressive economic stimulus. It said China must resist taking aggressive stimulus steps as they could add to excessive debt levels leading to an abrupt adjustment.

The IMF warning, contained in a policy report, comes today after Chinese leaders earlier this week signalled a shift toward looser fiscal policy to help barricade the world’s second-largest economy against global economic turbulence.

After more than a year of aggressively cracking down on dangerously high debt levels, China’s cabinet on Monday said it would be more “active” in stimulating the economy, citing “external uncertainties”.

The IMF also lauded Beijing’s stewardship of the economy, saying growth remained solid, all the more reason to pursue economic reform now and ‘fix the roof while the sun is shining’.

The IMF, however, expressed confidence that China could balance the competing imperatives and reiterated a 2018 full-year economic growth forecast of 6.6 per cent, down from the 6.9 percent recorded in 2017.

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