BEIJING – The International Monetary Fund asked China on Monday to be open to revising its restrictions on trade and investment – criticized by its trading partners – in order to play a leading role in globalization.
Speaking at the Asian Financial Forum in Hong Kong, David Lipton, First Deputy Managing Director of the IMF, said that a better globalization was in China’s own interest.
“The protectionist sentiments that have arisen in the West are a response to the perceived shortcomings of trade and economic integration and the unaddressed gap between winners and losers,” Lipton said.
Speaking about the domestic challenges for China, he said that China has to balance its growth and make it more consumption oriented and promote private investment at the expense of the public sector.
He also suggested that the country should implement a progressive tax system, streamline its state companies, spend more on health and education and reduce poverty.
The IMF warned that the Asian giant has to guarantee financial stability, making more efforts to rein in credit growth and tighten oversight of some lending practices.
Lipton stressed China’s international stature, pointing out that China generated a third of global economic growth.
“China is a key partner for over 100 countries: countries that represent 80 percent of global GDP. It is the hub of global supply chains, a magnet for commodity exporters, and a source of final demand,” he added.
The country is a leader in e-commerce and electronic payments, and also leads in development of fintech, robotics and artificial intelligence, the expert said.
It is also a major creditor for many countries, financing the development of their infrastructure.
Its loans represent between 25 to 30 percent of the GDP of some of the recipients, which helps them but often also creates concerns about the level of debts for these countries, according to the IMF official.
China is the biggest stakeholder in the Asian Infrastructure Investment Bank, the third biggest in the IMF and its currency – the yuan – has become part of the IMF reserve currencies since 2015, so that it was easy to see that Beijing’s role in international institutions will continue to expand in the next few years, Lipton said.