The Chinese economic reforms is progressing well, but substantial work remains to be done as the country is in the midst of transition to a new growth model which will benefit its global growth and reduce tail risks, the IMF has said.



"The Chinese financial reforms in particular have advanced wealth. For example, the new budget law has laid important foundations for strengthening local government finances," International Monetary Fund (IMF) spokesman Gerry Rice said at a press conference yesterday.

"On China's reforms broadly, I think we would say good progress has been made in many areas, at the same time, substantial work, remains to be done, again as China is in the midst of this transition to a new growth model," "We look forward to the full implementation of that in the coming years. Just on what is remaining to be done, it will be critical to continue progress in liberalising, opening up the market based pricing, while maintaining demand and financial stability," he said.



Responding to a question on review of the Special Drawing Rights (SDR) basket and the China's inclusion in it, Rice said the process is underway.

"IMF staff are preparing a report, which will include a recommendation to our Executive Board on that issue. I would underline that the decision rests with our Executive Board, which of course represents 188 countries," he said.



In its latest report ahead of the G-20 Summit, the IMF said China's economy is experiencing a needed moderation as it embarks on a historic and multi year rebalancing of its growth model.

China's rebalancing is generating large global spillovers, and, notwithstanding the Chinese economy's sizable buffers, could be bumpy, it said. IMF said China's economy needs to transition toward a slower, more sustainable growth path. A successful transition will benefit global growth and reduce tail risks.

"In the short run, the transition process is likely to entail spillovers through trade and commodities, which could be amplified by financial channels," IMF said adding that nonetheless, the international community should support China in this difficult endeavor.



Collective efforts also need to be renewed to enhance the global safety net and strengthen the resilience of the International Monetary System. Implementing IMF quota and governance reforms would be crucial in this regard.

"A successful transition will benefit global growth and reduce tail risk. In the short term, the transition process is likely to entail spillovers through trade and commodities, which could be amplified by financial channels," IMF said.



"The international community should support China's efforts to reform and rebalance its economy, to give market mechanisms a more decisive role, to eliminate distortions, and to strengthen governance and institutions," it added.