China should reaccelerate reforms such as tackling the shrinking labour force and weak productivity growth to maximise its economic potential, the IMF said on Friday.
The IMF on Tuesday upgraded its forecast for China’s 2023 GDP growth to 5.2%, citing the country’s full reopening – from the previous 4.4% projection made in October. But its medium-term growth prospects are clouded by structural issues, it noted.
China’s weak productivity growth is largely a result of inefficient state-owned enterprises (SOEs) and declining business dynamism, and the country must make reforms to keep SOEs competitive, it said.
While China’s dwindling labour force will pose a problem as the population ages and birth rate drops, the government could mitigate the impact on its economy by gradually lifting the retirement age to increase the labour supply, the report said.
