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- Chinese officials must take "forceful action" to address the problems in its property sector, an IMF official said.
- The group's chief economist said Beijing must enact robust policy to ensure developer risks don't spread.
- "Clearly what this is calling for is forceful action by the authorities," he said.
The chief economist of the International Monetary Fund cautioned that Beijing authorities must enact robust policy to address the issues plaguing China's property sector.
In a press conference Tuesday in Marrakesh, Morocco, Pierre-Olivier Gourinchas also warned that failure to act could lead to problems extend beyond troubled real estate developers.
"Clearly what this is calling for is forceful action by the authorities," Gourinchas said, according to Bloomberg.
Two of China's largest developers, Evergrande and Country Garden, have made headlines this summer, each dealing with massive indebtedness.
Bond investors in Evergrande this week warned that the company — which filed for Chapter 15 bankruptcy protection in August — could face an "uncontrolled collapse" that would be disastrous for the entire property sector.
To Gourinchas, Beijing should "help restructure struggling property developers, to make sure there isn't any increase in financial instability, to make sure it remains localized in the real estate market and doesn't spread into the broader financial system, and help restore confidence in households."
The comments came as the IMF lowered its economic outlook for the country, while reports emerged that China is weighing raising its budget deficit for 2023 amid talk of new stimulus measures.
The IMF slashed its growth outlook on China for this year from 5.2% to 5%, and for 2024 from 4.5% to 4.2%, with economists pointing to the property sector as a primary obstacle.