WASHINGTON (Sputnik) — The International Monetary Fund (IMF) thinks rapid credit growth and increased spending in China can lead it to unsustainable debt in future, IMF Managing Director Christine Lagarde said in a blog post on Wednesday.
"In China, a faster-than-projected expansion — if it continues to be fueled by rapid credit and increased spending — would potentially lead to unsustainable public and private debt in the future," Lagarde stated.
The IMF said the Chinese authorities are taking measures to sustain risks that stem from the country’s policies supporting current growth levels.
"In China, failure to address financial stability risks and curb excessive credit growth could result in an unwanted, abrupt growth slowdown, with adverse spillovers to other countries through trade, commodity price, and confidence channels," the IMF warned.
In June, the IMF projected that China’s GDP would grow by 6.7 percent in 2017 and by an average of 6.4 percent in 2018-2020.
