IMF Urges China to Shift Economic Model Amid Tariff Pressures

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has reiterated the Fund's call for China to shift from its export-led growth model to one centered on domestic consumption and services, also urging reforms in the property sector and a reduced state role in the economy. This stance comes in response to U.S. Treasury Secretary Scott Bessent’s directive for the IMF to focus on its core mission of global economic stability and to hold countries accountable for policies seen as globally distortive. Georgieva acknowledged that reducing the state's economic footprint in China is likely a long-term challenge. She warned that U.S. tariffs on Chinese goods, initiated during the Trump administration, could lead to deflationary pressures in China due to decreased demand for its exports, while the U.S. could experience supply shocks and increased inflation. The IMF has also lowered its global economic growth forecast due to these heightened uncertainties, emphasizing the broader impact of trade tensions and delayed reforms in major economies. Panelists at the Milken Institute Global Conference further highlighted that ongoing tariff disputes are causing businesses and consumers to hold back on spending and investment, raising concerns of a possible recession.