China’s Growth: Why Less is More

Steve BarnettBy Steven Barnett

(Version in 中文)

Less growth in China today will mean higher income in the future. So rather than worry, we should welcome the slowdown in China’s economy. Why? Because by favoring structural reforms over short-term stimulus, China’s leadership is illustrating their commitment to move to a more balanced and sustainable growth model.

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A Wish List for China’s Third Plenum

ASinghBy Anoop Singh

(Versions in 中文 and Español)

Hard landing, soft landing, no landing, overheating. Pundits’ views on China’s economy bounce around—often rapidly—between these descriptions.

Just two short months ago, the dominant concern was about a sharp slowdown, below this year’s official growth target of 7½ percent. Now, these fears have retreated, pushed aside by talk of renewed momentum.

Our sense, here at the International Monetary Fund, has always been that economic growth will slightly surpass this year’s official target. But we have also cautioned that China’s economic challenges are growing, and that accelerating reform is critical for containing risks and achieving a smooth transition to sustainable growth.

The upcoming Third Plenum provides an opportunity for the new leadership to provide guidance on how they plan to meet these challenges.

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Signs of Fiscal Progress: Will It Be Enough?

We’ve just updated our latest assessment of the state of government finances, debts, and deficits in advanced and emerging economies. Fiscal adjustment is continuing in the advanced economies at a speed that is broadly appropriate, and roughly what we projected three months ago. In emerging economies there’s a pause in fiscal adjustment this year and next, but this too is generally appropriate, given that many of these countries have low debt and deficits.

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