China remains overly reliant on exports and its currency is too cheap, says the IMF (Careful boys, or you won’t get your $50 bln contribution).
China’s recovery is not yet firmly established, the Fund says, though encouraging signs of a turnaround are taking hold.
China has more room for stimulus targeted at increasing consumption. Rebalancing China’s domestic demand could raise unemployment short-term, they say but the employment gains from rebalancing toward a domestic-demand lead economy would be greater than the losses in the long-term.
Not much new here, just a restating of the conventional wisdom. It does remind markets that China barks an awful lot for a country that is unwilling to bite its own economic imbalances.
