China's strong growth paves way for accelerating needed reforms: IMF

A worker monitors container operation at Zhoushan port in Ningbo, Zhejiang province. [Photo/China Daily]

WASHINGTON - China's strong economic growth so far this year has paved way for policymakers to accelerate needed reforms and focus more on quality growth, the International Monetary Fund (IMF) said on Tuesday.

"China continues to transition to a more sustainable growth path and reforms have advanced across a wide domain," the executive board of IMF said in a statement after concluding Article IV consultation with Chinese authorities on the Chinese economy.

China's economy expanded 6.9 percent in the first half of the year, well above the government's yearly target of 6.5 percent, according to data from the National Bureau of Statistics.

While its growth momentum will "likely decline over the course of the year", the IMF expected China's growth to "remain robust at 6.7 percent" this year, due to the momentum from last year's policy support, strengthening external demand, and progress on domestic reforms.

The executive directors also agreed that China needs further improvements in its fiscal and monetary policy frameworks in order to maintain economic growth and stability in the medium term.

"They supported improving the fiscal framework to increase local government autonomy, reduced the scope for off-budget spending, and centralized some expenditure responsibilities." the statement said. "They also called for completing the transition to a modern price-based monetary policy framework."

In terms of the renminbi exchange rate, the executive directors stressed the importance of continued progress toward "greater exchange rate flexibility," and welcomed the country's commitment to deepen reforms and rely more on market forces to determine the exchange rate.

The executive directors also commended China's increased focus on reducing financial stability risks, noting that "corporate debt is growing more slowly, reflecting restructuring initiatives and overcapacity reduction." They called for continued strengthening of regulatory and supervisory efforts.