IMF warns Chinese policies for growth hurting global economy

The International Monetary Fund faulted China’s economic policies for causing waste at home and damage abroad and called for a reorientation by Beijing to embrace a model based on domestic consumer spending.

- JAMES MAYGER AND JORGELINA DO ROSARIO

A REVIEW called for China to embrace a consumption-led growth model. Above, workers in Bije, China.

“Transitioning to a consumption-led growth model should be the overarching priority,” the IMF’s executive directors said in a statement Wednesday released alongside the Washington-based lender’s annual review of China’s economy, known as an Article IV consultation.

In that review, IMF staff highlighted China’s large current-account surplus, which has featured “adverse spillovers to trading partners.” Some of that excess stems from exports getting a boost from “real depreciation of the RMB,” the fund said, referring to the inflation-adjusted weakening of the renminbi, also known as the yuan.

Some of the IMF's language matched longstanding criticisms of the United States — across multiple administrations — and other developed nations. Its spillover warning also echoed a November assessment by Goldman Sachs Group Inc. economists, who said China’s expanding export capacity meant a net negative for the rest of the global economy.

China’s representative on the IMF's executive board, Zhengxin Zhang, took issue with the criticism, saying in a separate statement that China’s 2025 export growth “was primarily driven by its competitiveness and innovation capacity,” along with front-loading caused by Washington’s trade policy.