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IMF Warns China of Financial Risks

Attendees wait to begin an International Monetary Fund Committee (IMFC) plenary session at the International Monetary Fund (IMF) and World Bank Group Annual Meetings in Washington, D.C. on Oct. 14. Photo: Visual China
Attendees wait to begin an International Monetary Fund Committee (IMFC) plenary session at the International Monetary Fund (IMF) and World Bank Group Annual Meetings in Washington, D.C. on Oct. 14. Photo: Visual China

China must motivate local authorities to prioritize financial stability over high economic growth to ensure they are aligned with government policies to control debt risks and put less focus on expansion, the International Monetary Fund (IMF) said in a report Thursday.

Some of the underlying causes of financial risk in the world’s second-largest economy stem from the “overriding objective,” especially among local governments, to achieve high growth rates, which has fueled a substantial expansion in debt and “shadow banking,” the IMF said in an assessment of China’s financial system.

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