Global Market: China backs IMF scrutiny of fiscal risks in major economies

China supports the International Monetary Fund’s efforts to strengthen surveillance of fiscal risks in major advanced economies and assess their spillover effects on the global economy, People’s Bank of China Governor Pan Gongsheng said, according to a report by Reuters.

Speaking at a meeting of the International Monetary and Financial Committee during the annual gatherings of the IMF and World Bank in Bangkok, Pan called for greater attention to rising fiscal vulnerabilities and the impact of financial factors on global economic imbalances, according to a statement from the central bank.

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Global bond markets have faced a widespread selloff as borrowing costs rise amid concerns over persistently high fiscal deficits, mounting government debt and volatile investor sentiment. Heavy capital expenditure on artificial intelligence infrastructure has added to competition for financing, intensifying pressure on bond markets, the report stated.

Pan urged the IMF to deepen its analysis of global imbalances, placing greater emphasis on the role of financial factors, including cross-border capital flows, in shaping these disparities.

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He also reiterated China’s support for the multilateral trading system and opposition to protectionist measures, according to the central bank statement.

Pan’s remarks come as the IMF continues to highlight challenges facing the global economy, including fiscal sustainability, trade tensions and uneven growth.

Earlier this week, IMF Managing Director Kristalina Georgieva called on China to shift its growth model away from heavy reliance on exports and towards stronger domestic consumption, the report stated.

The IMF has repeatedly urged Beijing to address structural imbalances in its economy by boosting household spending and reducing dependence on exports and investment.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)