China's economic slowdown is a cause of concern for the Asia Pacific region says the IMF report. The financial body is asking China to reduce the government intervention in foreign exchange to help increase external investment.

Will the policy help China sail through the crisis?

Like Us on Facebook

Amongst the several things that were discussed during the meeting between China's Premier Li Keqiang and International Monetary Fund (IMF) chief Christine Lagarde, the financial body advised the government of China to increase the flexibility in the exchange rate policy in order to secure a better future for its economy. China, that was once the centre point of all growth in Asia, is currently experiencing a phase of slowdown which is most likely to affect the economy in the long run. The increased flexibility in currency exchange is expected to be a major boost to the other efforts in the direction of combating this economic slowdown.

The statement issued by IMF said that the need for reforms in the financial policy of China is quite evident. It also added that China needed to re-orient its economy by shifting its focus from real estate, heavy industry, and external demand in order to achieve reliable and durable growth. This has to be in addition to the other initiatives related to corporate de-leveraging to facilitate more foreign investment.

Of late, the rising amount of debts on China has become a cause of concern for the global economy. The IMF had also issued warnings with regard to this situation, saying that the increasing dollar dominated debt of China and Japan could affect the overall economy of the Asia Pacific region, as quoted on WSJ.com.

The IMF report also pointed out that China's growth is expected to stabilize itself by 2017, if the efforts are implemented as planned. It is said that reducing the intervention in the foreign exchange is being looked upon as the key driver to help China sail through these tough times.

In 2014, China's growth slowed down to a figure that is being considered to be the lowest in the last twenty four years, according to the report on BBC.

TagsChina Finance News, IMF news, IMF China economy forecast