China must reduce high levels of corporate debt and strengthen its banking sector if it wants to successfully transition to a new growth model, the IMF said in a report released Wednesday (U.S. time).
IMF said that China should take great care in how it manages this rebalancing and deleveraging process. This is not only important for China, given the impact any negative consequences in its own market would have on the global economy, the report said.
Central government debt is about 20 percent of China's GDP, while 70 percent of local government debt takes the form of investment with expected returns, media reports said.
