The International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, stated in a conference that the United States imposing tariffs on China will lead to a sharp decline in Chinese export demand, combined with reduced demand from Europe, putting pressure on China’s monetary tightening.
Georgieva, speaking at the Milken Institute Global Conference in Los Angeles, emphasized that the IMF has been urging China to shift from an export-oriented economic growth model to a consumption-oriented one.
Scott Bessent, the U.S. Treasury Secretary, previously mentioned that the IMF should return to its core mission. At the Milken Institute Global Conference, there were inquiries about whether the IMF should take a tougher stance towards China, to which Georgieva responded that the IMF has been doing so.
Georgieva outlined four key issues that the IMF has been urging China to address, which impact both its domestic and international economies. Firstly, transitioning from export-led to consumption-led growth. Secondly, rectifying the real estate industry. Thirdly, supporting the development of the service sector. Finally, reducing government intervention in the economy.
Georgieva mentioned that due to President Trump’s tariff measures, China’s export demand to the United States has sharply declined, leading to monetary tightening pressure in China. Additionally, demand from Europe is expected to decrease, potentially easing global inflation.
Since 2023, the Consumer Price Index (CPI) in mainland China has been weak, indicating insufficient consumption, primarily because residents are hesitant to spend money.
Following the easing of pandemic restrictions, alarms for deflation have been continuously sounding in mainland China, drawing significant attention.
In the past year, the People’s Bank of China has implemented measures such as lowering interest rates, guiding long-term bond rates downward, and some banks have even eliminated large deposits over three years, attempting to urge the public to shift from saving to consumption.
Official Chinese authorities have been consistently urging the public to consume more and shop more, but people are expressing that they lack the financial means to do so.