China needs to do more to address its property-sector problems and has scope to provide more stimulus to boost consumption, Krishna Srinivasan, director of the International Monetary Fund's Asia and Pacific Department, said on Thursday.
Srinivasan welcomed measures taken by Beijing so far to fix its property sector as "steps in the right direction" but "not sufficient."
He said measures taken so far do not come close to the IMF’s recommendation to offer support for indebted developers worth 5% of China’s gross domestic product (GDP) over three to five years, to enable them to finish apartments and protect homebuyers.
"More needs to be done on the property sector and on strengthening social safety nets," Srinivasan told a news conference.
"Some efforts have been made on pension reform," though they have been small steps, he said. "We need much more," he added.
"We believe they have space in the near term," Srinivasan said when asked whether China has room to ramp up stimulus, though he said any steps must be offset by fiscal consolidation measures in the medium term.
China's economy grew 5.4% in the first quarter, beating expectations, but markets fear a sharp downturn in the year ahead as U.S. tariff policies pose the biggest risk to the Asian powerhouse in decades.
The IMF downgraded its forecast for China's economic growth to 4% in both this year and next by 0.6 percentage point and 0.5 point, respectively, from its January outlook as higher tariffs and prolonged trade policy uncertainty weigh on exports and investment.
The fiscal expansion in China's 2025 budget, however, partially offsets the pressure from external headwinds, the IMF said.
