Lagarde still positive on China economy

International Monetary Fund Managing Director Christine Lagarde addresses a news conference during the spring meetings of the IMF and the World Bank in Washington April 14, 2016.[Photo/Agencies]

Christine Lagarde, managing director of the International Monetary Fund (IMF), defended her positive view of China's economy, as global economic and financial leaders gathered in Washington this week to convene the World Bank-IMF's spring meeting.

"It's normal that (China's) growth rate is a little bit lower than it was a few years back, perfectly legitimate, difficult but manageable," said Lagarde during an interview with Stephen Sackur, host of BBC's HARDtalk, at George Washington University on Thursday, an appearance that was listed on the spring meeting's official agenda.

"The Chinese economy is going through a massive transformation," she said. "It's moving from being vastly export-driven to being much more focused on the domestic market; it's moving from heavy-industry based to light industry and predominantly service driven, and it is clearly moving in terms of opening to the rest of the world."

Lagarde was adamant in her comments, which came in response to Sackur's pointed suggestion that "the world is losing its faith in China".

Lagarde conveyed a similarly positive message during an earlier press conference at IMF headquarters on Thursday morning.

"We've reset China's economic growth rate to 6.5 percent taking into account the measures that have been announced by the Chinese authority in its latest five-year plan," said Lagarde.

IMF's signature document, World Economic Outlook, released on Tuesday, raises China's 2016 growth rate from 6.3 as projected in the report's January version. The 2017 rate is now set to 6.2, also a 0.2 increase from its earlier version.

The outlook states that "growth in China was in contrast slightly stronger than previously forecast, reflecting resilient domestic demand, especially consumption" and "robust growth in the services sector offset recent weakness in manufacturing activity."

It concludes that "China's transition toward more sustainable growth, backed by ample policy buffers, is a welcome development."

Another key IMF document, Global Financial Stability Report, released on Wednesday, said that "China's financial integration with the rest of world is expected to accelerate, and its financial influence abroad will likely catch up with its economic prowess."

Lagarde seems satisfied that China has followed some of the IMF's advice.

"Some of the structural reforms that we have been advocating are clearly endorsed by the Chinese authority now," said Lagarde, who was just unanimously reelected to a second five-year term as managing director of the IMF.

Lagarde praised China's determination to play an increasingly important role in international organizations like the IMF.

"In the next five years, I am convinced that China will play an important role because it wants to be a player in these institutions and it wants to cooperate in the international domains, playing by the rules and belonging to the club," said Lagarde, calling China "a serious and solid partner".

Allan Fong in Washington contributed to this story.

charlenecai@chinadailyusa.com