IMF Says China Must Address Shortcomings to Lead Globalization

(Bloomberg) — China should be willing to loosen trade and investment restrictions if it seeks to play a leading role in globalization, International Monetary Fund First Deputy Managing Director David Lipton said.

Speaking at the Asian Financial Forum in Hong Kong Monday, Lipton acknowledged that China’s leadership has been a “voice of reason” in terms of preserving the current system of rules-based international trade, but the nation also had more to do.

“We believe that effective and credible leadership in support of globalization also requires a willingness to recognize and address one’s own shortcomings,” Lipton said. That means “protecting intellectual property rights and reducing the distortions of industrial policy, overcapacity, and policies that favor state enterprises.”

China should also accelerate its efforts to bring its financial sector to a more stable footing, according to Lipton.

“China has a window of opportunity to accelerate economic reforms that can secure sustainable and inclusive growth,” he said. “China has made considerable progress in this area, as our recent assessment of its financial sector shows. But it is essential to sustain this effort to ensure that financial instability does not undermine the country’s extraordinary economic and social progress.”

Read more about how the global outlook is helping China tackle debt

Lipton sounded optimism about the current state of the global economy, in the context of next week’s publication of fresh IMF economic forecasts.

“The signs point to faster growth across all regions,” he said. “We must also recognize that the global economy is in a late stage of the long and gradual recovery from the global financial crisis. With economic slack in advanced economies diminishing, it is not clear how long the good news will continue.”

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