IMF Paper: China Investment Excessive

on November 30, 2012 at 10:15 AM

China’s policymakers are leaning too heavily on investment to boost economic growth, a strategy that could destabilize the world’s second largest economy, according to a paper prepared by International Monetary Fund researchers. The paper, released this week, finds that China needs to lower total investment by about 10% of gross domestic product to correct course. If policymakers do not act, the authors say that “vulnerabilities will continue to build.” China, along with many other developing countries, has long depended on government-funded investment to encourage economic expansion.