The World Bank and the International Monetary Fund are urging China to focus on controlling risks from rapidly rising debt due to its reliance on credit-fueled growth.
The comments add to warnings by private sector analysts that China’s run-up in debt, especially since the 2008 global crisis, could lead to financial problems and disrupt economic growth that already is slowing.
In a report Friday, the World Bank said Beijing should pay close attention to rising credit, especially in its largely unregulated informal lending market, and reduce debts owed by local governments.
“These policy measures will improve the quality of China’s growth, making it more balanced, inclusive and sustainable,” said Karlis Smits, the report’s chief author, in a statement. That came after an IMF official said on Thursday that financial vulnerabilities have risen to a point where “containing them should be a priority”.