China will grow at a 6.8% in 2015 and 6.3% in 2016, according to the forecast of the International Monetary Fund (IMF) in October. The report provides similar numbers to those reported last April, updated in July. These are slightly lower than expectations by the Chinese government, which aims for a GDP growth for this year of around 7%. China’s GDP had an expansion of 7.4% in 2014, its lowest rate in almost a 25 years.

According to the IMF’s managing director Christine Lagarde, China’s slowdown is ‘healthy’. The Fund estimates that the current downturn of China’s economy is the result of needed reforms, thus disregarding this situation as a global economic threat. Moreover, Lagarde identified lack of investment, shortage of confidence and the uneven nature of the world’s post-crisis recovery as the three biggest risks to global growth.

Quoted by CNN, Lagarde insisted that China’s economy had to weaken, as Beijing pushed reforms that aimed to shake the foundations of their mode of development, shifting towards an economy powered by consumer spending.

Developing countries are concerned with China’s progress, as their economies rely heavily on the export of commodities. Hence, deputy director of the People’s Bank of China (PBOC) Yi Gang, insisted that Chinese imports of raw materials for its industry will grow steadily in the future.

In the eyes of the IMF, China still has room to stir the ship on its favour. Nevertheless, emerging economies should learn from their own past crisis and understand the necessity of adding value to commodities as a way to shield them from a total crush.

SOURCES:

http://www.bbc.com/news/business-34483326

http://money.cnn.com/2015/10/09/news/economy/china-lagarde-imf/

http://www.nation.co.ke/business/China-brushes-off-IMF-warning/-/996/2905402/-/bg8isjz/-/index.html

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