Slower but more sustainable, economic growth in China will benefit the world in the long-term, the head of the International Monetary Fund (IMF) said on Tuesday.
“China itself has embarked on an ambitious multi-year rebalancing of its economy, toward slower and more sustainable growth. This is a positive endeavor that, in the long run, will benefit everybody,” IMF Managing Director Christine Lagarde said in Paris.
“In the short run, however, this transformation generates spillover effects — through trade and lower demand for commodities, and through financial channels as well,” she added.
China’s once-startlingly fast economic growth has slowed steadily since 2010. It grew by 6.8 percent in 2015, according to estimates from the IMF, which forecasts expansion of 6.3 percent in 2016.
Lagarde spoke at a farewell event for Christian Noyer, the recently retired governor of the Bank of France and chairman of the Bank for International Settlements.
On Tuesday, Lagarde said that the slowdown in economic convergence between developed and developing countries was “a cause for concern.”
“The global community cannot afford the cost of stalled convergence, because the 85 percent (of countries that are ’emerging’ or ‘developing’) matter,” Lagarde said.
The 60-year-old added that emerging market countries needed to redirect their economies towards “added value” goods and services, rather than over-relying on commodity exports.
Lagarde noted that “the short-term nature and inherent volatility of short-term capital flower were part of the problem facing emerging markets today” and called for a “strong global financial safety net.”
The IMF head is one of the world’s most influential women. She is a trained lawyer and previously held various ministerial positions in the French government, including that of finance minister.