May 19
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China's economic recovery is going well but is unbalanced by weak consumption, the IMF said, warning of uncertainty caused by regulatory crackdowns in the tech sector and a slowdown in productivity.

A less favorable base of comparison, as well as weak consumption and a curtailment of real estate investment, will be key headwinds to growth this year, the IMF said in a report.

China's recovery is going well, but it's lacking balance and the pace has slowed down.

The IMF predicts the world's second-largest economy will grow 4.8% in 2022 and 5.2% in 2023, compared to last year's 8.1% growth.

The People's Bank of China is expected to take strong support measures in the coming months to stabilize the faltering economy. China enjoyed a strong recovery from the pandemic-driven downturn, but growth slowed sharply in the second half of last year.

The IMF report also noted a flurry of seemingly uncoordinated regulatory measures against technology companies and other sectors that are seen by the market as "undermining the role of private enterprises" and called for more transparency and predictability.

Last year, China launched regulatory action against tech giants, private education firms and other firms for unfair competition and data governance.

Such reforms could boost growth but could hurt market sentiment, which in turn could lead to lower investment, the IMF said.

The IMF also called for measures to ensure fair competition between China's private firms and its state-owned enterprises (SOEs), warning that such reforms are needed to address slowing productivity growth.

According to the report, the Chinese authorities said that external divisive pressures create critical barriers to productivity growth, which they see as requiring a greater role for SOEs in strategic sectors.

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