Deputy Managing Director of IMF Nigel Clarke Photo: screenshot of IMF's official website

Deputy Managing Director of the International Monetary Fund (IMF) Nigel Clarke said on Sunday that a comprehensive package of reforms aimed at boosting consumption and lifting productivity could boost China's potential GDP growth by about 1 percentage point per year over the medium term.

Speaking at the China Development Forum in Beijing, Clarke noted that the reforms could translate into a level of GDP that is close to 20 percent higher than the IMF's baseline forecast by 2040.

"In China, reallocating resources to services would have another important benefit: by creating jobs and increasing incomes, it could help boost consumption. A welcome goal that is also a top priority of the government," said Clarke.

While household consumption as a share of GDP in China has risen, he said, it remains among the lowest compared to most Organization for Economic Co-operation and Development (OECD) countries, he said. "A sustained increase in consumption's share of GDP could lead to continued rapid gains in living standards and provide a welcome lift to global demand. This rebalancing of demand also requires reforms to reduce the need for precautionary savings, especially by middle- and lower-income households," Clarke said.

Clarke's remarks come as China has stepped up efforts to stimulate domestic consumption while navigating a complex external environment and ongoing structural reforms at home.

Global Times