China economic outlook uncertain: IMF

AFP, BEIJING: China’s economic outlook is uncertain with corporate debt and an opaque financial sector contributing to looming vulnerabilities, an International Monetary Fund Official said yesterday.
David Lipton, first deputy managing director at the IMF, said the near-term growth outlook in the world’s second largest economy had become more buoyant because of recent policy support but warned of potential pitfalls ahead.
“The medium-term outlook is more uncertain due to rapidly rising credit, structural excess capacity, and the increasingly large, opaque, and interconnected financial sector.”
Speaking in Beijing, where he had been meeting senior banking and government officials among others, Lipton said China needed to accelerate the pace of economic reforms as it had fewer options for dealing with future crises.
Corporate debt, state-owned company reform and lack of communication between financial regulators were all cited as vulnerabilities.
He suggested China establish a special group to restructure its hulking state-owned enterprises, which have long suffered from inefficiencies.
Beijing has long vowed to reform the companies, which control critical sectors of the economy ranging from coal production to telecommunications, but institutional resistance has stymied those efforts.
Lipton also singled out corporate borrowing as a major concern.

China economic outlook uncertain: IMF

AFP, BEIJING: Chinas economic outlook is uncertain with corporate debt and an opaque financial sector contributing to looming vulnerabilities, an International Monetary Fund Official said yesterday. David Lipton, first deputy managing director at the IMF, said the near-term growth outlook in the worlds second largest economy had become more buoyant because of recent policy support but warned of potential pitfalls ahead. The medium-term outlook is more uncertain due to rapidly rising credit, structural excess capacity, and the increasingly large, opaque, and interconnected financial sector. Speaking in Beijing, where he had been meeting senior banking and government officials among others, Lipton said China needed to accelerate the pace of economic reforms as it had fewer options for dealing with future crises. Corporate debt, state-owned company reform and lack of communication between financial regulators were all cited as vulnerabilities. He suggested China establish a special group to restructure its hulking state-owned enterprises, which have long suffered from inefficiencies. Beijing has long vowed to reform the companies, which control critical sectors of the economy ranging from coal production to telecommunications, but institutional resistance has stymied those efforts. Lipton also singled out corporate borrowing as a major concern.