The International Monetary Fund made sizable increases on Wednesday in its forecasts for China’s economic growth, while questioning the scale of the Chinese government’s assistance to export-focused industries.
The fund estimates that China will grow 5 percent this year and 4.5 percent in 2025. That is 0.4 percentage points more for each year than the fund predicted just six weeks ago.
China’s gross domestic output expanded 5.2 percent last year, as the economy rebounded after nearly three years of stringent pandemic policies that stifled growth. Many economists, including at the I.M.F., had anticipated that China would be held back this year by a severe contraction in the housing market and a slowdown in consumer spending.
Yet while property prices continued to fall and retail sales grew sluggishly, China powered ahead in the first three months of this year. Its economy expanded at an annual rate of about 6.6 percent because of booming increases in exports and strong factory investments.
The Chinese government is taking steps to address the housing crash, but faces enormous challenges. Years of overbuilding have resulted in four million new but unsold apartments and, by one conservative estimate, as many as 10 million that developers have sold but not finished building.
Many owners of vacant investment apartments also find themselves facing years of hefty mortgage payments but little chance the apartments will appreciate significantly in value.
A plan unveiled this month for local governments to buy large numbers of empty apartments and convert them to affordable housing has been met with skepticism by many analysts.
Beyond housing, China has made very heavy investments this year in its factories, which already dominate global markets for goods ranging from furniture to electric vehicles and solar panels.
Gita Gopinath, the first deputy managing director of the I.M.F., said at a news conference in Beijing on Wednesday that the latest upward revision of its growth forecasts was “driven by strong first quarter G.D.P. growth and recent policy measures,” particularly moves to stabilize the housing market.
She called on China to do more to address its real estate problems and warned that the government’s industrial policies might hurt other countries.
“China’s use of industrial policies to support priority sectors can potentially lead to a misallocation of domestic resources and also potentially affect trading partners,” Ms. Gopinath said. She suggested China scale back these policies.
Janet L. Yellen, the United States Treasury secretary, has criticized China in recent months for its industrial strategy. She has warned against allowing China to greatly increase its exports to make up for economic troubles at home. She has begun rallying international support for tariffs or other restrictions on low-cost Chinese exports that may threaten industries and jobs in the West.
President Biden this month announced sharp increases in tariffs on some Chinese imports, including electric vehicles and solar panels.
Xi Jinping, China’s top leader, said that China’s policies were helping the world by increasing the global supply of goods and alleviating international inflation pressures.
Ms. Yellen criticized the I.M.F. last month for not challenging China’s manufacturing push, which she described as creating overcapacity that is leading Chinese companies to ship their products overseas at very low prices.
Chinese officials reject the term overcapacity as an unfair characterization of their economy. An I.M.F. statement on Wednesday avoided the word, and so did Ms. Gopinath during her news conference.
The I.M.F. recommended that China strengthen its social safety net, which analysts have said China must do to develop a stronger consumer economy and depend less on exports.
Mr. Xi has been wary of increases in social spending. “We still must not aim too high or go overboard with social security, and steer clear of the idleness-breeding trap of welfarism,” he said in a speech three years ago.
With China’s labor force gradually shrinking because of a decades-long “one child” policy, and with productivity gains slowing now that China has caught up with or passed the West in many technologies, the economy is still expected to grow more slowly in the coming years. The I.M.F. staff predicted on Wednesday that growth would slow to 3.3 percent by 2029.
For the I.M.F., trade squabbles between the West and China come at a particularly delicate time. The fund, which lends money at low interest rates to countries in fiscal distress, is supported financially by investments from member countries.
Established in the aftermath of World War II, the fund has long been dominated by Europe and the United States, which provide much of its money. But voting rights at the fund are supposed to be calculated partly on a country’s trade and currency reserves, as well as the size of its economy. China now has the world’s largest trade and currency reserves, and has sought a corresponding increase in its influence at the fund.
China’s leadership in trade and currency reserves is part of the same export drive that already worries the West.
Ms. Gopinath said the fund’s first priority is to expand its base of capital for lending, which it is doing by obtaining larger investments from member countries.
