The International Monetary Fund (IMF) has advised China to prioritize a transition towards consumption-led growth as part of its efforts to rebalance the economy. IMF mission chief for China, Sonali Jain-Chandra, highlighted the importance of this shift during an interview, emphasizing that more robust fiscal stimulus is necessary to bolster domestic demand. This recommendation follows the presentation of China's 15th five-year plan proposals, which reflect a growing emphasis on consumption in light of recent economic challenges.

Jain-Chandra underscored that the IMF supports China's focus on consumption as indicated in the readout from December's central economic work conference, which outlines the country's economic objectives for the upcoming year. She referred to a comprehensive policy package from the IMF's annual review known as the Article IV consultation. This package suggests implementing more aggressive fiscal measures to uplift consumption levels, address the pressures on the property sector, and enhance social protection, alongside calls for monetary easing and greater flexibility in exchange rates.

Moreover, this advisory from the IMF comes amid discussions on China's record trade surplus, signifying a potential disconnection between external trade dynamics and domestic consumption needs. The call for a strategic pivot towards a consumption-driven economy aims to alleviate systemic risks and promote sustainable growth. The IMF's recommendations highlight the critical need for policy adjustments that can effectively support the country's long-term economic resilience and stability.