China's growth has slowed significantly in recent months. But even its current pace of expansion may be unsustainable unless the country starts making significant and systemic changes to its economy, and soon, the International Monetary Fund warned Wednesday.
“Since the global crisis, a mix of investment, credit and fiscal stimulus has underpinned activity,” the I.M.F. said in a major annual assessment of the Chinese economy. “This pattern of growth is not sustainable and is raising vulnerabilities. While China still has significant buffers to weather shocks, the margins of safety are diminishing.”
The report emphasized downside risks to the Chinese economy, touching on familiar themes though imparting more of a sense of urgency than it has in the past.
The country still has large foreign-currency reserves and plenty of room for new government spending to buffer against any unexpected shocks, said Markus Rodlauer, the I.M.F.'s China mission chief, in an interview. But he said the Chinese economy was looking more and more vulnerable, with changes only getting harder to make as time goes on.