The announcement came in the context of the PRC’s annual review of the economy and growing concerns about global imbalances.
From exports to domestic demand
In a report released yesterday, the IMF noted that despite China’s robust GDP growth in 2025, the economy is too focused on exports and government stimulus rather than consumer activity. As a result, domestic demand remains weak, requiring structural reforms, The Wall Street Journal noted.
The IMF is also calling for a reduction in government subsidies to industry from the current roughly 4% of GDP to 2%, believing that excessive subsidies lead to inefficient allocation of resources. According to the fund’s experts, this should also facilitate the transition to a more balanced and sustainable growth model.
In a statement, Sonali Jain-Chandra, IMF mission chief for China and Asia and the Pacific, emphasized: “Industrial policy has led to innovation in some sectors, but overall its impact has been negative, as resources have been allocated inefficiently and critical domestic markets have been overshadowed by the export sector.”
Risks and prospects for reforms
The fund’s recommendations suggest strengthening social protection, reforming the tax system and measures to support domestic consumption. Such steps could help the People’s Republic of China reduce its dependence on external demand and increase the economy’s long-term sustainability.
Analysts believe that the implementation of these recommendations will be one of the central topics at the upcoming international economic forum in Beijing and may affect the investment strategies of international corporations focused on the Chinese market.
