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IMF says China has tools to avoid Evergrande's problems becoming systemic crisis

FILE PHOTO: A man walks in front of unfinished residential buildings at the Evergrande Oasis, a housing complex developed by Evergrande Group, in Luoyang, China September 15, 2021. REUTERS/Carlos Garcia Rawlins

WASHINGTON (Reuters) – The International Monetary Fund on Tuesday said it is closely following developments surrounding China Evergrande Group, but believes Beijing has the tools to prevent the situation from turning into a systemic crisis.

IMF chief economist Gita Gopinath told Reuters the real estate sector was a big part of China’s economy, and China Evergrande’s potential default could have implications for China’s economic activity and financial stability.

“We are following the developments in China very closely,” Gopinath said, underscoring the need for regulatory reforms to address the heavily leveraged property sector. “We still believe that China has the tools and the policy space to prevent this turning into a systemic crisis.”

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