IMF Says China’s State-Led Growth Model Is Hurting Other Economies, Calls for Subsidy Cuts

The IMF says China’s export-driven growth and state support are widening trade imbalances and increasing pressure on global partners.

A worker moves pieces of steel machinery at a manufacturing company in Hangzhou, China, on June 16, 2025. AFP via Getty Images

The International Monetary Fund (IMF) has sharply criticized China’s state-led growth model, warning that heavy industrial subsidies, debt-financed investment, and weak domestic demand are distorting the economy at home and creating damaging spillovers abroad.

In a Feb. 18 report following the conclusion of the IMF’s most recent Article IV review of China and its economic policies, IMF analysts estimated that Beijing, as of 2023, spent about 4 percent of its gross domestic product (GDP) to subsidize key industries, and that figure has been “broadly stable over recent years.” The report said that China’s industrial policies are “giving rise to international spillovers and pressures.”