IMF raises China's economic growth forecast to 5% due to strong first quarter

The IMF's report, released on Tuesday, predicts that China's economy will grow by 5% this year. This is higher than the earlier estimate by 0.4 percentage points. The report suggests that for China to maintain this growth, it needs to improve social safety nets and increase workers' incomes so that people can spend more money. The IMF also recommends that China reduces subsidies and policies that favor manufacturing over other industries like services. The Chinese government aims for an annual growth rate of around 5%, and the economy grew by 5.3% in the first quarter, which helped the global economy. To support growth, China has implemented measures like lower interest rates and easier home loan requirements. The IMF praises China's focus on high-quality growth, including investments in clean energy and technology. However, the report warns that China needs a more balanced approach to navigate economic challenges. Job losses and falling housing prices have affected many Chinese people's finances. Economists agree that China must improve social safety nets and raise incomes to boost spending. Looking ahead, the IMF predicts China's economic growth to slow down to 3.3% by 2029 due to an aging population and lower productivity growth. The report also mentions concerns about China's industrial policies benefiting some sectors at the expense of others and causing issues for trading partners. The IMF suggests that China needs consumer-friendly reforms to sustain strong growth. The organization recently raised its growth forecast for China to 5% this year, up from 4.6%, citing positive first-quarter figures and policy measures. The IMF expects China's economy to grow by 4.5% in 2025 but anticipates a slowdown to 3.3% by 2029. In response to the economic challenges, China has taken steps to support the real estate sector, such as removing the floor on mortgage rates. The IMF believes more comprehensive actions are necessary to address the issues in the housing market. Chinese President Xi Jinping has emphasized the importance of promoting high-quality employment to support the economy.