Speaking at a press conference on August 22, IMF executive director Carlo Cottarelli warned the watching media that it was “totally premature to speak of a crisis in China.” The warning came in response to mounting challenges for the world’s number two economy, with an economic slowdown stock market slump chief among them.
Stock markets have taken a more than 30 percent hit since the mid-point of the year, mostly in response to poor economic data
Stock markets have taken a more than 30 percent hit since the mid-point of the year, mostly in response to poor economic data and the realisation that growth in China is far less than many have grown accustomed to. The slump has been coupled also by panicked predictions for the future of the Chinese and global economy, though Cottarelli has been quick to reassure investors that the reduced rate is a consequence of “necessary” adjustments.
The high-ranking IMF official insisted that monetary policies had been very expansive in recent years, and, as such, the slowdown is part of the transition to safer and more sustainable growth. “China’s real economy is slowing but it’s perfectly natural that this should happen,” said Cottarelli, according to Reuters report. “What happened in recent days is a shock on financial markets which is natural.”
The claims are closely in keeping with the IMF’s recent China predictions. In a conference call earlier this month, Markus Rodlauer, Deputy Director of the organisation’s Asian Pacific Department and Mission Chief for China, said: “This transition is challenging, but the authorities are committed to achieve it. They have made progress in reining in vulnerabilities built up since the global financial crisis, and have embarked on a comprehensive reform program.”
The IMF forecasts still that GDP growth will clock in at 6.8 percent for this year, which, although less than last year, is still close to Chinese authorities’ own target of seven percent.
