China's contribution significant: IMF

WASHINGTON -- China contributed significantly to the global economic growth during the financial crisis and the trend is expected to continue, according to a report released by the International Monetary Fund (IMF) on Wednesday.

The Executive Directors of the IMF believed that "expansionary policies in China during the crisis had played an important role in bolstering global stability and growth, and expected China's positive externalities to continue, especially for regional economies," said the IMF in its annual assessment of the Chinese economy.

"A major disruption in China's so-far-steady growth would have material adverse consequences for the rest of the world," said the Washington based international financial institution.

It noted that China's economy remains on a solid footing, propelled by vigorous domestic and external demand.

"China's near-term growth prospects continue to be vigorous and are increasingly self-sustained, underpinned by structural adjustment," revealed the report.

According to the IMF projection, Chinese economy will grow 9.6 percent in 2011 and 9.5 percent in 2012.

On the risk side, the IMF sees inflation, asset price increases and rapid credit growth in banking systems are the major factors.

"While inflation is expected to subside reflecting ongoing monetary policy tightening, upside risks remain, in particular from higher food and commodity prices," it noted. "Asset price developments and continued rapid credit growth, coupled with global liquidity conditions, pose policy challenges."

The fund suggests that the current environment calls for a further tightening of macroeconomic policies.

It welcomed actions taken by the Chinese government to cool down rising property prices, emphasizing that any long-term solution to property bubbles would need to involve a significantly higher cost of capital, financial development, and higher real estate taxation.

The 187-member global lender also noted that the acceleration of China's economic transformation toward a more inclusive and balanced growth model will improve the welfare of the Chinese people and contribute to sustained and balanced global growth.

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