China’s economy is expected to grow 7.9% in 2021 after growing 1.9% in 2020, as economic activity continues to normalize and domestic outbreaks of COVID -19 remain under control, the International Monetary Fund (IMF) said on Friday.
“The Chinese economy continues to recover quickly from the pandemic, aided by a major containment effort and swift policy measures to mitigate the impact of the crisis,” the IMF’s board said in a statement after the conclusion of the annual review of China’s economy under Article IV.
“Policymakers have provided financial assistance and fiscal support to protect the most affected companies while preserving financial stability,” the IMF’s board said, adding that macroeconomic and financial policies had supported economic recovery.
IMF executive directors called for continued “moderate support” fiscal and monetary policies until China’s recovery is on solid footing.
As the recovery takes hold, temporary measures to support the financial sector should be replaced with policies to address lending problems and strengthen regulatory and supervisory frameworks, the executive directors said.
The directors also praised the continued progress of China’s structural reforms, especially in opening up the financial sector and improving labor mobility through “hukou reforms.”
“Structural reform will be essential to boost potential growth, reduce external imbalances and build a more resilient, greener and more inclusive economy,” they said.
In its latest World Economic Outlook released on Tuesday, the World Bank also predicts that China’s economy will grow 7.9% in 2021.