The Future of China's Growth Model

03 February 2022

China rebounded strongly from the pandemic, but growth is losing momentum while remaining overly dependent on support from investment and exports. Latest IMF Country Focus by Chang Yong Rhee, Helge Berger and Wenjie Chen looks at how China can transition to sustained high-quality growth that’s balanced, inclusive and green.

 

While China’s many challenges have no easy answer, the key message of the IMF’s annual Article IV review of the economy released this week is that rebalancing toward a more consumption-based model will boost growth prospects in the short term and deliver high-quality expansion in the long run. Importantly, it will also help bring the country closer to achieving its climate goal of carbon neutrality before 2060.

--Green gains: Successfully rebalancing toward consumption will aid China’s climate aims by shifting activity to relatively untapped services industries and away from carbon-intensive industrial sectors. In fact, rebalancing alone can help cut carbon emissions by about 15 percent over the next three decades, according to IMF staff simulations.


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