Chief Representative of the International Monetary Fund to China: China will continue to contribute one-third to global economic growth

Recently, the annual Central Economic Work Conference was held in Beijing. The conference deeply analyzed the current economic situation and systematically deployed economic work for 2024 to ensure stable and sustainable economic growth. Previously, the International Monetary Fund (IMF) raised China's GDP growth forecast for this year from 5% in October to 5.4%. Steven Barnett, the Chief Representative of the IMF to China, recently shared his views on the key policy measures adopted by the Central Economic Work Conference and the expected performance of the Chinese economy in 2023 and 2024 in an interview with Global Times reporters. He stated that household consumption and green transformation will be the main driving forces for China's economic growth in 2024, and the Chinese economy will bring a welcome boost to the global economy.
Global Times: How do you view the 2024 China Economic Policy mentioned in the recent China Central Economic Work Conference? Do you think these policy measures will continue to drive China's economic recovery?
Barnett: I believe that policies in the following two closely related areas will be the key factors affecting China's future economic performance.
One is to promote the smooth transition of the real estate industry towards a new development model. Over the past year, the Chinese government has implemented many measures to support the real estate market. Looking ahead, implementing a comprehensive package of policies may make the adjustment process smoother. I think the key points may include further promoting the reasonable exit of bankrupt developers while protecting the interests of homebuyers. These measures will help restore market confidence in the real estate industry.
Another is to implement supportive macroeconomic policies. China has policy space to ensure economic recovery and offset the economic costs of real estate adjustments. In terms of finance, further supporting household consumption can boost the economy while reducing the financial burden. These measures can include supporting low-income families and strengthening social security networks.
In terms of monetary policy, I believe that further easing monetary policy through interest rate cuts will provide more support for economic growth.
Global Times: How do you view the growth of the Chinese economy next year?
Barnett: The key to economic growth lies in quality. The growth model driven by improving productivity, increasing household consumption, and sustainable development of a green economy is a form of high-quality growth. In early November, we predicted that the Chinese economy would maintain good growth in 2024.
Global Times: What is your evaluation of China's economic performance in 2023?

Barnett: Based on stronger than expected third quarter economic data and the recently announced fiscal stimulus plan, we have recently raised China's economic growth forecast for this year from 5% to 5.4%.

Based on this growth rate, China will contribute about one-third of the driving force to global economic growth in 2023. Our research also indicates that rapid economic growth in China will have positive spillover effects on other regions of the world. For every 1 percentage point of economic growth in China, the average output level of other economies will increase by 0.3%.
Global Times: In 2023, China has taken a series of policy measures to improve the business environment and stabilize foreign trade. How do you evaluate China's efforts in this regard?
Barnett: China is developing rapidly in industries such as electric vehicles and green technology. The strong growth of these industries helps to support economic growth in the context of continuous adjustments in the real estate market. In fact, China is at the forefront of global technology in photovoltaic equipment and electric vehicles. However, compared to the real estate industry, the scale of these emerging industries is still very small. Therefore, in order to support future economic growth, it is necessary to make broad-based and market-oriented reforms to ensure effective allocation of resources and promote productivity growth.
Throughout the world economy, economic integration has made billions of people wealthier, healthier, and receive higher levels of education. However, global trade tensions have been intensifying recently. Our research suggests that over time, the cost of trade fragmentation may reach up to 7% of global GDP.
We believe that what the world needs is not division, but to make trade once again an engine driving economic growth. Countries around the world need to lift the destructive trade restrictions and distorting subsidies implemented in recent years. China is strengthening the multilateral trading system and continuing to play a crucial role in various initiatives of the World Trade Organization. China's efforts to restore the dispute resolution mechanism of the World Trade Organization are being widely welcomed internationally.
Global Times: Under multiple pressures, China will continue to promote industrial transformation and upgrading in 2023. How do you view China's efforts to promote high-quality economic development? What areas do you think are the biggest highlights and potential of the Chinese economy?
Barnett: I believe that through coordinated reforms, China can achieve higher levels and more resilient economic growth, which is beneficial for the global economy.
Our estimation shows that by 2037, a comprehensive reform plan aimed at improving productivity can further increase China's GDP level. This will help China maintain a significant contribution to global growth in the coming period. Meanwhile, the rapid growth of the Chinese economy will also benefit other countries, especially Asian countries with close trade ties with China.
Global Times: What are your expectations for the world economy in 2024? How much contribution will the Chinese economy make to global economic growth?
Barnett: In our latest global forecast (released in October), the Chief Economist of the IMF stated that the global economy is faltering forward. The world economic growth rate is expected to decrease from 3.5% last year to 3.0% this year, and may drop to 2.9% next year. In the 20 years before the COVID-19 outbreak, the global average growth rate was 3.8%. The decline in growth rate is evidence that the global economy is faltering. A series of economic shocks brought about by the COVID-19 epidemic have caused major trauma to the world. Vulnerable economies usually experience the most severe trauma. It is expected that the GDP performance of low-income developing economies will be more than 6% lower than our pre pandemic expectations. In contrast, developed economies have performed significantly better than developing economies. This highlights that the global economic recovery is both slow and uneven. The international community must work together to support the recovery of low-income and vulnerable economies.
Last month, we raised our forecast for China's economic growth in 2024. According to the new forecast, by 2024, China will also contribute about one-third to global economic growth.