The IMF Got China's Diagnosis Right and Its Prescription WrongZhang Ming: China Needs Reform, but Not the IMF’s Prescription

CASS economist Zhang Ming accepts the IMF's findings on weak consumption, local government debt and falling investment returns, but rejects convergence toward the structure of mature Western economies as the goal of reform.

The IMF's latest report says China should invest less, consume more and pull back on industrial policy. Zhang Ming, an economist at the Chinese Academy of Social Sciences, read it closely and concludes the diagnosis is largely right but the medicine is wrong.

What he resists most is an implicit premise: that China should end up looking like a mature Western economy. Yet average annual growth of nearly 9 per cent over 40 years is itself a rebuttal to the idea that there is only one correct path to development.

Zhang's answer is Industrial Policy 2.0, not abandoning the tool. That is a firm line, though I would rather know how the evaluation mechanism is supposed to work in practice.