IMF advises China to strengthen policy buffers

China's growth is clouded by mounting domestic vulnerabilities, says the IMF, and needs to become more consumption-based, inclusive and environmentally friendly.

China’s near-term challenge is to contain risks to financial stability by reining in credit growth and non-traditional forms of lending, the IMF said in a report released late on Wednesday.

IMF directors agreed that China has the capacity to withstand shocks, but considered that a further strengthening of policy buffers over time would be desirable, it advised in the report, which is part of the IMF’s regular country surveillance.

The most pressing priorities, it concluded, are further deregulation of interest rates, greater use of market-based instruments in monetary management, enhanced prudential oversight of bank and non-bank activity, and orderly liberalisation of the financial industry, at an...

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