China Needs Fiscal Stimulus Should Growth Target Slip - IMF

The Chinese government should address potential failure to meet economic growth target with a fiscal stimulus, International Monetary Fund (IMF) Communications Director Gerry Rice said on Thursday.

WASHINGTON (Sputnik) — Rice explained that China is embarked in "historic rebalancing" of economic growth model, which has been "bumpy."

"If growth would risk slipping below that [set] target, we have recommended the first line of defense should be fiscal stimulus," Rice stated in a press briefing.

In November 2015, China's President Xi Jinping signaled an end to the country's annual 7-percent growth benchmark, announcing a 6.5-percent benchmark until 2020. China's 2015 third quarter growth amounted to 6.9 percent, according to official figures.

He added that since the effects of the shift are being felt in various parts of the world, the Chinese government should provide more clarity on its policies, particularly the exchange rate regime.

"Our views on China’s fundamentals remain unchanged," Rice concluded.

Seven percent fall at the Shanghai and Shenzhen stock exchanges on January 7, triggered the new Chinese stock market circuit-breaker mechanism, causing a knock-on effect across the world.

China's trade suspension was followed by Wall Street sliding one percent and European stock markets slumping by two percent.