IMF official on China's growth model transition

CNC
Added On April 13, 2019

An official of the International Monetary Fund (IMF) recently sat down for an interview with CNC.
 
During the interview, the official said that as China makes its transition to a new growth model prioritizing the quality of growth, fiscal policy should facilitate this transition and have a long-term view.
 
Vitor Gaspar, director of the IMF's fiscal affairs department, said the transformation of China's fiscal policy over the past few decades is "truly remarkable", highlighting the "tremendous" development on tax policy and the budget system.
 
SOUNDBITE(ENGLISH): VITOR?GASPAR, Director, IMF's Fiscal Affairs Departmen
"China has made tremendous progress over these 40 years and there was almost a transformation in the process. There are parallel developments in other areas of the budget."
 
In the context of the global financial crisis, Gaspar said China resorted to fiscal stimulus which helped sustain its growth and contributed to the prosperity of the global economy.
 
As the credit goes up, Gaspar said, the IMF's analysis shows that de-leveraging is progressing "at a good pace" in China.
 
SOUNDBITE?(ENGLISH): VITOR?GASPAR, Director, IMF's Fiscal Affairs Department 
"So the process of deleveraging?has been progressing in China and it is welcome on the fiscal side. It should be complimented by the type of strategy it outlined."
 
However, he said in recent years, things have become more "complicated" because of the challenges having to do with the transition in the growth model, which demands adjustment in fiscal policy.
 
SOUNDBITE (ENGLISH): VITOR?GASPAR, Director, IMF's Fiscal Affairs Department
"The analysis at the fund does suggest that de-leveraging is progressing at a good pace in China. When you think about the transition between growth models from a growth model that emphasizes the quantity of growth to growth model that emphasizes the quality of growth, there are many issues which required judgment to smooth and facilitate a transition on that." 
 
Gaspar suggested China enhance fiscal transparency, utilize fiscal policy to foster inclusive growth, and reinforce the financial robustness of sub-national levels of government.
 
SOUNDBITE(ENGLISH): VITOR?GASPAR, Director, IMF's Fiscal Affairs Department
"Moreover, it's important to reinforce the financial robustness of sub national levels of government. And that is one of the issues which has already been identified by the Chinese authorities and where progress is to be expected."
 
In wake of new challenges to international cooperation, Gaspar said it is crucial that countries avoid resorting to unilateral or bilateral action.
 
SOUNDBITE(ENGLISH): VITOR?GASPAR, Director, IMF's Fiscal Affairs Department
"It’s crucial to avoid debt countries resort to unilateral or bilateral action. Multilateralism is a much more robust way of approaching problems that countries have in common."