China's economy has been supported and maintained at a stable growth by strong government policy support, despite the ongoing trade tension and hikes in tariffs from the US, according to the latest assessment on the country's economy by the IMF.
Chinese government policies in support of stable economic growth have been "sufficient" to offset the negative impacts from the recent US tariff increase on the $200 billion Chinese exports, the report of the IMF's 2019 Article IV Mission that was released in Beijing Wednesday showed.
Policies aimed at stimulating the economy have been put forward this year. In April, for example, value-added tax for the manufacturing sector was reduced by 3 percentage points to encourage domestic manufacturing and consumption.
The IMF has yielded a more moderate economic growth estimate of 6.2 percent for 2019, compared with 6.3 percent in April.
Kenneth Kang, deputy director of the Asia and Pacific department of the IMF, told the press at the conference that the more moderate estimate of GDP growth is based on the combination of positive policy support and the negative impact of US tariffs.
"Impacts of the trade war bring down our estimate of economic growth by about 0.2 percentage points from spring," Kang said. "But the positive macroeconomic policies raised our estimation by 0.1 point, therefore the overall estimation was 0.1 percentage point lower."
Further policy support is needed to respond to further tariff hikes, the IMF report said.
However, the IMF noted that further policy easing will be warranted to facilitate structural reforms, including fiscal expansion to deleverage the economy and reforms to provide competitive neutrality to maintain a level playing field for the private sector and state-owned enterprises.
"Private companies have been a driving force behind the economy and a key contributor of job opportunities," Kang said. Deeper structural reform and robust growth by private companies will bring about a stronger, healthier and more resilient economy in China, especially faced with the uncertainties around the current trade tension, according to Kang.
