IMF Calls for Shift in China’s Economic Model Toward Consumption-Led Growth

The International Monetary Fund has stated that China’s current economic policies are generating inefficiencies domestically and producing adverse effects on global trading partners. The comments were issued on February 18, 2026, alongside the IMF’s annual Article IV review of China’s economy.

The Fund said that China’s large current‑account surplus and export‑advantaged currency dynamics are contributing to global imbalances. The IMF also emphasised the need for structural reforms aimed at shifting the economy towards domestic consumer spending.

IMF Urges China to Prioritise Consumption-Led Growth

In its statement, the IMF’s executive directors said that transitioning to a consumption‑driven economic model should be China’s overarching priority. They noted that the existing investment‑heavy and export‑oriented framework has created inefficiencies within the domestic economy.

The Fund highlighted that a recalibration towards household consumption could strengthen long‑term stability. The comments were released as part of the formal communication accompanying the Article IV consultation.

Article IV Review Highlights External Imbalances

The IMF’s Article IV staff review drew attention to China’s large current‑account surplus and its implications for global trade flows. The Fund stated that the surplus has resulted in adverse spillovers for several trading partners.

The review also noted that part of the surplus is influenced by the real depreciation of the renminbi, which has supported China’s export performance. The IMF said these dynamics warrant a policy shift to align with balanced global growth.

Spillover Concerns Echo Broader International Assessments

Some of the IMF’s language reflects long‑standing concerns raised by multiple advanced economies regarding China’s trade dynamics. The organisation’s remarks also align with an assessment by Goldman Sachs economists published in November, which argued that China’s expanding export capacity could negatively affect global economic conditions. The review stated that growing external pressures underscore the need for domestic rebalancing. These observations add to a wider debate over China’s role in global supply chains and competitiveness.

IMF Calls for Policy Shift Ahead of NPC Session

The IMF’s executive board collectively called for a significant adjustment in China’s economic policy framework. The timing of the release comes weeks before the National People’s Congress session, where China will announce major economic targets for 2026.

The IMF noted that the reorientation toward domestic consumption is essential for long‑term resilience. The statement was also issued during China’s week‑long lunar new year holiday, adding context to the timing of the review.

Read More: India’s GDP to Grow at 6.9% in 2026 as US Trade Deal to Add 20 bps Says Goldman Sachs.

Conclusion

The IMF’s latest assessment urges China to shift its economic model toward consumer‑driven growth. The Article IV review highlights external imbalances linked to China’s large surplus and currency dynamics.

China has contested the criticisms, defending its export strength and innovation capabilities. The divergence in viewpoints underscores ongoing tensions in global economic discussions as China prepares its forthcoming policy targets.

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