IMF Cites China Downside Risks

Amid slowdown in Chinese growth, fund urges government to boost consumption.

The International Monetary Fund said China’s slowing economy faces significant downside risks and relies too much on investment, urging leaders to boost consumption and channel citizens’ savings away from housing.

The IMF repeated an assessment that the yuan is “moderately” undervalued, which China disputed, the Washington-based lender said in an annual review. The fund omitted an estimated range for the currency’s undervaluation that was included in an earlier draft, according to two officials at the fund who had seen the previous language and spoke on condition of anonymity.

Estimates Omitted

The IMF refrained in this year’s report from giving an estimate of how much the yuan may be undervalued, compared with last year’s assessment, which gave a range of 3 percent to 23 percent. Rodlauer, asked why figures were left out this year, said on the call that “numbers tend to get a life of their own,” though some estimates will appear in a separate exchange-rate report to be issued “shortly.”

Labor Situation

Wen warned this month of a “severe” labor outlook and said economic difficulties may persist for a while as downward pressure on the economy remains “relatively large.”

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