The International Monetary Fund has criticized China’s current economic policy, emphasizing the need to shift the country’s growth model from an export-driven approach to stimulating domestic consumer demand. Fund representatives stated that the existing approach leads to inefficient resource allocation within the country and creates risks for the global economy.
This is reported by Finway
Surplus Issues and Impact on the Global Economy
In its annual review of China’s economy, prepared by the IMF as part of Article IV consultations, a significant current account surplus of the People’s Republic of China is noted, which has “negative spillover effects for trading partners.” A substantial portion of this surplus is linked by the IMF to the increase in exports driven by the “real depreciation of the yuan.” The depreciation of the Chinese currency, adjusted for inflation, enhances export competitiveness but simultaneously exacerbates imbalances in global trade.
“Transitioning to a consumption-based growth model should be a priority,” the statement reads.
Some of the IMF’s points echo long-standing criticisms from the United States and other developed economies. It is also noted that the IMF’s assessments align with the conclusions of Goldman Sachs analysts, who warned as early as November of last year that the increase in China’s export potential negatively impacts the global economy.
Beijing’s Position and Economic Growth Prospects
A Chinese representative on the IMF Executive Board, Zhengxin Zhang, disagreed with the claims, stating that China’s export growth in 2025 is primarily driven by increased competitiveness and innovative development, as well as rapid deliveries amid new U.S. trade policies. Nevertheless, the IMF Executive Board urges China to implement deep changes in its economic strategy, which should include not only macroeconomic support but also structural reforms to develop the domestic market.
The IMF forecasts that after a GDP growth of 5% in 2025, China’s economic growth rate will slow to 4.5% in 2026. Analysts expect that the growth target for the next year will be set within the range of 4.5–5%.
In this year’s IMF report, the term “external imbalances” is mentioned more than ten times, whereas it was absent in last year’s report. China’s current account surplus for the year amounted to 3.3% of GDP, which more than doubled the IMF’s previous forecast of 1.5%. The Chinese representative considers this estimate to be exaggerated.
According to Bloomberg’s calculations, the surplus reached 3.7% of GDP due to a record trade surplus of $1.2 trillion. Economists believe that in the next three years, this figure could reach 1% of global GDP — the highest level for a single country in history.
The IMF predicts that by 2030, the surplus will decrease to 2.2% of China’s GDP, but this is still above the “normal” level of 0.9%. The fund also notes that the weakened yuan gives Chinese goods an advantage in global markets, while imports remain low due to weak domestic demand. Experts estimate that the yuan is undervalued by approximately 16%.