Front Matter Page
IMF Country Report No. 17/248
PEOPLE’S REPUBLIC OF CHINA
SELECTED ISSUES
August 2017
This Selected Issues paper on the People’s Republic of China was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed on July 14, 2017.
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Front Matter Page
PEOPLE’S REPUBLIC OF CHINA
SELECTED ISSUES
July 14, 2017
Approved By
Asia and Pacific Department
Prepared by a team led by Sonali Jain-Chandra, with individual chapters authored by Sally Chen, Ding Ding, Joong Shik Kang, W. Raphael Lam, Daniel Law, Rui Mano, Johanna Schauer, Alfred Schipke, and Longmei Zhang (all APD), Philippe Wingender (FAD), Thomas Harjes (MCM), Phil Stokoe (STA) and Calixte Ahokpossi (SPR).
Contents
CHINA’S HIGH SAVINGS: DRIVERS, PROSPECTS, AND POLICIES
A. Introduction
B. Household Savings
C. Corporate Savings
D. Government Savings
E. The Role of the State and Policy Recommendations
F. Prospects for Savings
References
CREDIT BOOMS—IS CHINA DIFFERENT?
A. Introduction
B. Why Worry About China’s Credit Boom?
C. Can China-Specific Buffers Prevent Financial Stress?
References
BOXES
1. Measuring Credit: How Large Is China’s Nonfinancial Sector Credit?
2. The IMF’s Institutional View on Monetary Policy and Financial Stability
TACKLING CORPORATE DEBT AND ACHIEVING PRODUCTIVITY GAINS—THE CENTRAL ROLE OF STATE-OWNED ENTERPRISES
A. Introduction and Key Facts
B. Recent Developments and Policy Measures
C. Policy Implications
References
APPENDICES
I. Debt Vulnerabilities of Zombie Companies, Overcapacity Firms, and SOEs
II. Reduction of Capacity in Coal and Steel Sectors
A MARKET-BASED MONETARY POLICY APPROACH FOR CHINA
A. Context: Policy Developments and Evolving Framework
B. The Transmission of Monetary Policy
C. Setting Policy Interest Rates
D. The Next Steps in the Transition to a Market-based Monetary Policy Framework
References
CHINA: CAPITAL ACCOUNT LIBERALIZATION
A. Capital Account Liberalization and Openness
B. Assessing Capital Account Liberalization and Tightening
C. Policy Recommendations
APPENDICES
I. Measures Taken by China Since Mid-2016 to Stem Capital Outflows
II. Chart of the IMF’s Integrated Approach to Capital Account Liberalization
ASSESSING CHINA’S RESIDENTIAL REAL ESTATE MARKET
A. Background and Recent Developments
B. Risks in the Real Estate Market
C. Policy Implications
References
APPENDIX
I. An Empirical Analysis of China’s Residential Real Estate Market
REASSESSING THE PERIMETER OF GOVERNMENT AND IMPLICATIONS FOR FISCAL SPACE
A. Broader Definitions of Government Deficit/Debt Remain Relevant
B. China Has Some Fiscal Space, But Less Than Headline Debt Figures Suggest
C. Policy Implications
References
BOXES
1. Treatment of Quasi-fiscal Units in Government Finance Statistics Manual (GFSM) 2014
2. If Needed, Fiscal Stimulus Should Promote Rebalancing and Not Increase Investment
INTERGOVERNMENTAL FISCAL REFORM IN CHINA
A. Background
B. Recent Government Reforms
C. Policy Recommendations
References
INEQUALITY IN CHINA – TRENDS, DRIVERS AND POLICY REMEDIES
A. Introduction
B. What Is the Current State of Inequality? How Has it Evolved Over Time?
C. What Are the Main Drivers That Explain Trends in Inequality?
D. Looking Ahead: What Will Be the Impact of Structural Trends and Policies on Inequality in The Future?
E. What Role Can Fiscal Policy Play in Reducing Inequality?
References
APPENDIX
I. Cross-Country Regression