The International Monetary Fund has urged China to ‘recalibrate’ its Covid-19 strategy, including boosting vaccination rates, and to shore up its troubled property sector to restore confidence.
In a statement following virtual meetings for its annual review of China’s economic policies, the Washington-based fund said it was maintaining GDP growth forecasts issued in October.
It is forecasting growth of 3.2% this year and 4.4% next year, assuming a gradual lifting of China’s strict zero-Covid policy in the second half of next year.
The IMF’s first deputy managing editor Gita Gopinath said:
Although the zero-Covid strategy has become nimbler over time, the combination of more contagious Covid variants and persistent gaps in vaccinations have led to the need for more frequent lockdowns, weighing on consumption and private investment, including in housing.
Going forward, a further recalibration of the Covid strategy should be well prepared and include boosting the pace of vaccinations and maintaining it at a high level to ensure that protection is preserved.
Chinese authorities are seeking to contain a fresh spike in Covid infections that has dimmed hopes for a quick reopening of the economy, the world’s second-largest.
The fund welcomed authorities’ recent initiatives for China’s slumping property industry, including a loan programme to help complete unfinished homes and allowing forbearance on troubled property loans. Gopinath said:
Building on these efforts, additional robust and well-funded mechanisms are needed for completing troubled unfinished projects and protecting new presale buyers from the risk of non-completion, while forbearance measures should be phased out.
These measures will help restore homebuyer confidence and facilitate market-based restructuring.
She stressed the need for structural reforms in the sector and new savings models.