Transcript

Transcript of Press Briefing on China Article IV Consultation

May 29, 2024

PARTICIPANTS:

Moderator:

TING YAN

Senior Press Officer, Communications Department

IMF

Speakers:

GITA GOPINATH

First Deputy Managing Director, IMF

THOMAS HELBLING

Deputy Director, Asia and Pacific Department, IMF

SONALI JAIN-CHANDRA

Mission Chief for China, Asia and Pacific Department, IMF

STEVE BARNETT

Senior Resident Representative of China

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T R A N S C R I P T

MS. YAN: Good morning, everyone. Welcome to this IMF Press Conference on 2024 China Article IV Consultation. My name is Ting Yan, I’m Senior Press Officer in the IMF. It’s great pleasure to be here in Beijing and see all of you here in person. Let me first introduce our four speakers today. We have Gita Gopinath, First Deputy Managing Director at the IMF. Thomas Helbling, Deputy Director of Asia & Pacific Department at the IMF. Sonali Jain-Chandra, the IMF’s Mission Chief for China. We also have Steve Barnett, Senior Resident Representative in China.

As we speak, we have just published the press release on the Article IV on imf.org. Gita will begin with opening remarks to highlight the key messages of the press release, and then we will be happy to take your questions. Please note that today we have the Chinese interpretation available, and our video recording and transcript will be posted on imf.org afterwards. With that, let me turn the floor over to Gita.

MS. GOPINATH: Thank you, Ting, and good morning, everyone, and a warm welcome to you all. We are here today to share our latest economic assessment for the People's Republic of China. We've had constructive discussions with senior officials of the government and the People's Bank of China. I would like to thank them for the excellent discussions, for meticulous organization and very warm hospitality extended to us throughout our visit.

So let me start by noting that China's economic development over the past few decades has been remarkable, driven by market-oriented reforms, trade liberalization and integration into global supply chains. However, these achievements have been accompanied by imbalances and headwinds to growth have emerged. The authorities recognize these challenges and are focused on achieving high quality growth. In our view, a more comprehensive policy approach would help China navigate the headwinds facing the economy.

I would like to highlight a few messages from the mission. First, we project China's economy to grow by 5 percent in 2024 and 4.5 percent in 2025. These reflect upward revisions of 0.4 percentage points for both the years compared to the April world economic outlook projections, and it's driven by a strong first quarter GDP growth in 2024 and recent policy measures. Inflation is expected to rise but stay low as output remains below potential. Core inflation is projected to increase only gradually to average around 1 percent in 2024. Over the medium-term, growth is expected to slow to 3.3 percent due to aging demographics and slower productivity growth. Overall risks to the outlook are tilted to the downside, including from a greater or longer than expected property sector adjustment and increasing fragmentation pressures.

Second, the ongoing housing market correction, which is necessary for steering the sector towards a more sustainable path, must continue. The authorities have implemented various welcome measures to guide the property market transition, including recent policy announcements regarding lending support for affordable housing. We see scope for a more comprehensive policy package to address property sector issues. Importantly, central government resources should be deployed to help homebuyers of pre-sold unfinished homes. This will also pave the way for exit of insolvent developers from the property market. Allowing for greater price flexibility can further stimulate housing demand and help restore equilibrium.

Third, near-term macroeconomic policies should be geared to support domestic demand and mitigate downside risks. Fiscal policy should prioritize providing one off central government financial support for the real estate sector. Excluding this one-time property sector package, a neutral fiscal stance in 2024 would balance tradeoffs between supporting domestic demand, mitigating deflation risks, and managing unfavorable debt dynamics. The monetary policy easing implemented so far in 2024 is welcome, but given that inflation remains subdued and output is below potential, there is scope for further easing. Greater exchange rate flexibility would reduce deflation risks and help absorb external shocks.

China faces significant fiscal challenges, especially for local governments. Sustained fiscal consolidation over the medium-term is needed to stabilise debt. Restructuring the unsustainable debt of local government, financing vehicles can help reduce fiscal strength. To tackle elevated financial stability risks, the authorities have appropriately focused on addressing vulnerabilities in the property sector, in local government finances, and in smaller financial institutions. Strengthening the Bank resolution framework and strictly applying credential standards will help enhance financial stability and mitigate risk.

Fourth, achieving high quality growth will require structural reforms. Key priorities include rebalancing the economy towards consumption by strengthening the social safety net and liberalizing the services sector to enable it to boost growth and create jobs. Fifth, China’s use of policies to support priority sectors can potentially lead to a misallocation of domestic resources and also potentially affect trading partners. Scaling back such policies and removing trade and investment restrictions will raise domestic productivity and ease fragmentation pressures. In this context, China should continue its efforts to strengthen the multilateral trading system, particularly the World Trade Organization.

China plays an important and constructive role in supporting debt restructuring in low-income countries and promoting the green transition. The Fund looks forward to our continued cooperation with the authorities in this regard. With that, thank you and we'll be happy to take your questions.

MS. YAN: Thank you very much, Gita. Please raise your hands if you have a question and identify yourself with name and media organization and try to be brief as we are going to take as many questions as possible. Here in the first row, the gentleman. Thank you.

QUESTIONER: James Mayger with Bloomberg News. I have two questions, one for Ms. Gita Gopinath and one maybe more technical questions for the staff. The first is there is increasing trade tensions between China and develop nations with new tariffs being threatened or imposed by the EU and the U.S. amongst others. A lot of that is response to the growing imbalance in Chinese trade, where the Chinese surplus in manufactured goods is now higher than the combined surplus of Germany and Japan in the 80s before the plaza accord as a percentage of global GDP. Do you think this surplus in manufactured goods is excessive and needs to be brought down, and how do you think that should be done?

My second question is, in the reported goods trade surplus between China and the rest of the world, the SAFE is reporting a surplus of about $600 billion, whereas the customs data is over $800 billion for last year. This discrepancy only appeared in that data in 2021. What's the issue? What's this difference between these two accountings raised in your meetings with the Chinese, and do you accept the Chinese explanation that this is purely due to accounting factors on how to deal with free trade zones like that? Thank you.

MS. GOPINATH: Thank you. We, as an institution, we care very much about having a multilateral rules-based trading system. We recognize that there can be disagreements across countries in terms of the policies that they deploy in their individual countries. And one particular area that is getting a lot of attention is industrial policy. Now, industrial policy, if it is meant to address market failures, serves the role, and it is useful. But of course, if it is done more indiscriminately on a more permanent basis, it can lead to distortions. This has implications for allocation of resources within countries. So individual countries need to care about this from their own country perspective, too. And it has implications for the rest of the world with potential spillovers to the rest of the world.

So I think it is important to recognize is that more work still needs to be done on the world trading system in terms of the rules to be able to better address concerns that countries have about each other's use of industrial policy. But our preferred approach would be that this is done in a multilateral context through strengthening the WTO and without taking unilateral actions on this front. And I'm going to ask my colleague Sonali if you'd like to come in on the second part.

MS. JAIN-CHANDRA: Sure. On the second question, regarding the difference on the trade surplus data between the BOP and customs, this is indeed an issue that we have discussed closely at the technical level this year as well as last year. I would say that the difference is, in general, is because customs data is based on physical movement of goods across borders, while the BOP records data based on transactions between residents and non-residents when ownership changes hands. And what I would also emphasize is that the gap exists for all countries that follow the principle of our BOP manual to compile the BOP statistics. So this has been discussed, and you will be able to see more details of this analysis in the Staff Report that will be published in a few months.

MS. YAN: Thank you. The lady in the first row, here.

QUESTIONER: Good morning. I'm from China Daily, and I have two questions for Gita. The first one is, what's the global economic impact of the direct trade decoupling between China and U.S.? And the second question is, do you believe in what China can bring more opportunities to foreign investors? Thank you.

MS. GOPINATH: Sorry, the first question was on implications of trade tensions between the U.S. and China?

QUESTIONER: Direct trade decoupling between the U.S. and China. Thank you.

MS. GOPINATH: Just to step back, we've seen in the last year a significant increase in the number of trade restrictions being imposed around the world. So we've had, in 2023, we've had 3,000 trade restrictions that were imposed. It's useful to remember that in 2019, that number was 1,000. So it's about three times what was done pre-pandemic. So this is certainly an environment where countries are deploying restrictive trade policies.

There are many arguments for it. First, is an argument for national security concerns. An argument about resilience. Third, concerns about protecting their domestic labor market. So there has been an increase in risks to the global trading system, and we are seeing early signs of fragmentation. Trade across countries that are more geopolitically aligned is holding up better than trade across countries that are less geopolitically aligned. We have seen the share of trade, for example, between the U.S. and China- their respective shares have declined.

This is early days, so we are not seeing large scale decoupling. That is not where we are. The consequences of all of these measures for the economy will depend a lot on how much of fragmentation there is. If it is done in a very contained way, it could be very low in terms of the cost, but less than half a percent of world GDP. But if there is a more severe form of fragmentation, with actually serious decoupling across blocks then we could see a loss of global GDP of around 7 percent over the medium-term, which would be sizable.

So I believe we still have a narrow window to make sure that countries can work together pragmatically to address their relevant concerns, to be able to preserve as much as possible the global trading system, while, of course, recognizing that there is a need to build resilience, and recognizing that domestic policies will have to also adjust to make sure that those who are negatively impacted by global trade receive the support that is needed from their own government.

QUESTIONER: Thank you. And the second question is attracting foreign investment.

MS. GOPINATH: In terms of on attracting foreign investment into China. For China, as for every other country in the world, and especially for every other emerging and developing country in the world, if you can have a strong business environment in terms of ease of doing business, which depends upon your regulatory alignment, but also in terms of building strength in human capital through strong education, if you have macro stability. I mean, all of these are factors that would attract foreign investment. And it's important that you make sure that you're providing a level playing fields so you are not favoring some firms over the others, but across firms in domestic, foreign, private, that you have a level playing field. That's going to be critical, too.

MS. YAN: Lady in yellow in the second row here. Thank you.

QUESTIONER: Thank you very much. I have a question for Gita. You know, in July, China will hold a very significant conference themed on reform and opening up. So what is your assessment of China's reform and open up in the last ten years? Moving forward, what is your advice on deepening reform and opening up? Thank you.

MS. GOPINATH: As I said at the start of my remarks, if you look over the last several decades, China has had a remarkable economic growth, and that has come from a greater market-based orientation in their economic growth. It's also come because of their integration to the world trading system, integration into global supply chains. So this has been an important part of the growth story. But there has been, alongside and in growth, an increase in imbalances within the economy.

So I would say that if I were to list about three things that I think would be very helpful to focus on going forward, one is to make sure that growth is more demand driven in the economy. So policy measures that help support higher consumption in China, that can be done through a stronger social safety net, that would be one way of having more demand driven growth. That would be one direction in which to go. The second is in terms of liberalizing the service sector. There was a lot of potential for the services sector to create jobs and growth. So liberalizing that sector would be valuable. And then the last is in terms of, you know, people policies, which is focused on education, on health care. All of this can be tremendously valuable to have more higher structural growth. Thank you.

MS. YAN: Reporter in the second row here.

QUESTIONER: Thank you. I’m a reporter from the Car News (phonetic). I have two questions. The first one, China's foreign chain grew by 5 percent in their first quarter. Any comments on that? The U.S. recently announced two race tariffs on China. What impact would it have on global economic growth? The second one, in the first quarter, China's GDP grew by 5.3 percent from a year ago. Considering consumption is the driving force behind economic growth, how would you evaluate the role of China's strategy to expand domestic demand? Thank you.

MS. GOPINATH: So the first quarter export growth at 5 percent partly reflects -- is an offset from the end of last year. So if you look at the end of 2023, export growth in China was particularly weak. So there is -- this is more like a correction back in that. If you look at, you know, a question that came up earlier, which is in terms of China's exports in general, yes, the manufacturing exports have been strong, but services sector imports have been large too. So the net exports, the difference between exports and imports, is relatively contained.

In terms of the recent tariffs, I think it's too early to say. A lot depends on it and we're still looking at the details of it. It also depends on what kinds of reactions there are from other trade partners. So I think we're at an early stage to assess that at this point in terms of implications for the economy. The point that we have been making strongly is that policies that exacerbate fragmentation is just negative for the whole world. Would you like to add anything, Thomas, on this? No, ok.

MS. YAN: Let me come back to this side. Yeah, lady in the second row. Thank you.

QUESTIONER: Thank you. I’m with the 21st Century Business Herald. First of all, regarding the U.S. new recent tariffs hikes on China, are you concerned that a new trade war between the two countries are actually coming? And the second one, is the world at the state of oversupply of green energy capacity? And what is the projection of the global demand for EV's in the coming years? And thirdly, there's an argument for subsidizing renewable energy production and green technologies in the absence of a price on carbon. So do you think actually a subsidy policy is the second best choice without a proper price on carbon? Thank you.

MS. GOPINATH: In terms of your starting question, which is on potential escalation of trade tensions across countries. You know, the data point that I gave you, we said that we're seeing a very large increase in trade restrictions. This was true in 2023. It was true in 2022. Relative to pre-pandemic, I think is corroboration of the fact that there has been an increase in restricted trade policies across countries. Countries are also increasingly relying on industrial policies and we're seeing the most number, for example, in the last couple of years, the largest number of industrial policies that are getting announced are by the U.S., the European Union and China. We also see evidence of very quick retaliation in terms of when any of these three regions, the U.S., the European Union, China, put a subsidy in place. We've seen that within the next twelve months, there's a 75 percent probability that the other country also retaliates with another subsidy.

So we are in this space where there is much more risk of having a fragmented trading system. I think that is the environment that we're in. That said, you know, the fact that there continues to be strong dialogue between countries in U.S. and China, European Union and China, I think all of those dialogues are a pragmatic way of trying to deal with the tensions that exist. And the more that can be done on that front so that countries can work together, that would be very beneficial.

To your question on green technology, green transportation subsidies versus carbon pricing. So firstly, you know, the question of what is the projected demand for EV’s. I don't know anybody here is competent to answer that question. We don't have that. I mean, ultimately how much demand there will be for EV's depends a lot on the policies that countries are putting in place. So if your policies generate, you know, a lot more refueling stations, recharging stations for EV's, you're going to see households wanting to own EV's more likely. If you have a price increase on carbon, you're going to make, again, green transportation more attractive. So how much demand there is going to be is going to depend upon all the other complementary policies that you have in place.

Again, green investment is an area where one can make an argument for why industrial policies can be beneficial. Subsidies can be beneficial too, because again, that isn't market failure that you're trying to address and so there's road for it. But that said, that doesn't mean there is no limit to how much of subsidies one provides because you could end up with serious misallocation of resources within your economy if you don't do it at the right level. At the IMF, we have been making the case for carbon prices. We recognize the subsidies also have a role to play. That's important. But carbon pricing is important for multiple reasons. It's very effective in signaling to households and farms that we are on the path through this transition. I think it's a very effective device.

But secondly, you know, given that many governments around the world are more fiscally constrained, they have record high levels of debt, carbon pricing is a way to actually make the green transition happen without governments having to take on more debt or raise other kinds of taxes. So it is fiscally also a responsible way to address the green transition. Of course, those revenues, some part of it, should be used to help the vulnerable segments who are getting negatively, say, impacted by this transition. But a package that just relies only on expenditure measures and does not rely on any kind of carbon pricing, we think, is going to be firstly costlier for countries to make the transition happen and less effective.

MS. YAN: Okay. Yeah, lady in the third row here.

QUESTIONER: Thank you. Good morning. You've mentioned structural reforms a little bit, and I just want to follow up on question -- oh, sorry. I’m from the South China Morning Post. So just want to follow up on the third plenum in question. There are a few whys, and my question is, if we can just pick one, what do you think is the most pressing issue in terms of structural reforms that China should address in that meeting? And my second question is, what are the impacts of the Federal Reserve's prolonged interest rate cuts on China and other Asian country economies. And a third one, a few days ago, a Chinese scholar said “China can actually launch its own marshal plan to address its own over capacity in the green sector. In the meantime, filling the funding and technology gap to help developing countries in terms of their own new energy transition”. I’m just wondering what do you think of that idea? Thank you.

MS. GOPINATH: Okay, maybe, Steve, you would like to comment on the plenum and I can come on in the other.

MR. BARNETT: On the third plenum, I only get to pick one. If we think of the third plenum as a time to look at medium and long-term reforms, if I could pick just one, it's to boost productivity. If we look, China's success of remarkable development over the past several decades was mapped into rapid productivity growth. So the way to do that is to continue with economic reforms to boost productivity, and this kind of takes us to things like give the market a decisive role in the economy, which actually featured prominently for the first time in the 2013 third party plenum. Level the playing field between all types of firms, state owned firms, private firms, foreign firms. and then, as Gita mentioned earlier, create a good business environment that's market oriented. These are the kind of reforms that will boost productivity. Ultimately, how fast an economy grows in the long run is based on growth and productivity. And our own research shows that, you know, over a 15 year period with good reforms, China's GDP level could be 18 percent higher. So there's a lot at stake with success here.

MS. GOPINATH: On your question on Fed interest rate policy implications for other economies, including Asian economies. The U.S. economy is in a position of strength. We see inflation coming down as expected. It will take some time. The Fed, I think appropriately, is taking its time to decide when to cut rates because the U.S. economy is in a good position and our baseline is for there to be a soft landing. So I think for the world as a whole, having a strong U.S. economy is positive. Interest rates being higher in the U.S. for longer certainly raises borrowing costs in the world. It has implications for currencies. But that said, I think it is absolutely critical for the welfare of the world that the US Fed is able to bring inflation back down to its target of 2 percent.

And to your question more generally about funding needs in developing countries for the green transition, this is a longstanding issue. There are efforts being made on multilateral forums for this to happen. There's some progress happening, but I mean, ultimately, given the scale of financing need that's required, it cannot come through public money alone. It will require mobilizing private money, which is why policies that are able to clearly signal a great transition that will give clarity to investors in terms of what is truly green and what's not. Those are the kinds of measures that will be needed to get money going.

MS. YAN: Thomas, do you have anything to add on Asia? I think the question also asked what was impact on Asia.

MR. HELBLING: I think on the impact on Asia given inflation divergence between Asia and the U.S., with the U.S. having higher rates still on Asia, all, in general, already close to target, such monetary policy diversion has led to some depreciation pressures on the exchange rate. But as we have argued in our April Regional Economic Outlook, it's important that central banks in Asia first and foremost focus on domestic price stability objectives and orient monetary policy toward that, and let the exchange rate appreciate in the process.

MS. YAN: Thank you. The gentleman here in the second row, please.

QUESTIONER: Thank you. I am from Xinhua News Agency. You have mentioned that China should continue its efforts to strengthen the multilateral trading system, particularly WTO. How do you evaluate China's efforts so far in such area? And what should all the other or other major economies do to deal with the risks facing the multilateral trading system? Thank you.

MS. GOPINATH: China has been playing a very important role in discussions with the WTO, including the ministerial conference, to make greater progress on rules-based trading system. As I mentioned, there are areas that require work in terms of how to deal with subsidies. This is something that's unfinished work at the WTO. It will require countries coming together and making progress on this front. However, for there to be real progress, I think much more will be needed from all countries to genuinely push forward on having a strong rules based trading system. Because the alternative is just so, you know, as abstract and generates so much uncertainty about what exactly are going to be rules of engagement that that has a negative impact on investment, it has a negative impact on productivity. So I think we should be very, very, very careful about that.

In terms of what countries need to do, I think, again, the ideal would be to have a stronger WTO. What is probably more practical at this point is for countries to engage, keep an open dialogue, and make sure that there are constant discussions across your different authorities across countries. There is a working group between the U.S. and China dealing with these issues, which I think is very helpful in this regard. Second, there are some areas where countries actually seem to be working well together, and that is helpful. For example, in terms of services, trade, that's one area where actually progress is being made, and you're seeing several countries signing on to easing the grounds for having more trade in services. That's positive. Climate is an area where countries also work closely on. Though, of course, there are different areas where sometimes conflict is emerging. Debt, and especially in low income countries, debt is an area where there is close engagement across countries, including through the G-20 common framework and the Global Sovereign Debt Roundtable. So again, I think recognizing that cooperation is needed to address common global challenges is one way of building trust. And hopefully that then spills over into other areas, including on trade.

MS. YAN: Thank you. Let me go to the back, the gentleman in the end. Last row.

QUESTIONER: Thank you. In the statement, you mentioned recent policy measures that boosted growth. Which policy measures were these exactly? Could you elaborate on those? And should China do more of those? And my second question is you also refer to industrial policies in China that could affect trading partners. Could you just elaborate on what those industrial policies are exactly? And then you mentioned that trade restrictions in China could be removed. Which trade restrictions?

MS. GOPINATH: So in terms of the policies, several policies have been announced that affect different aspects of macro stabilization. So one, in terms of just raising domestic demand, the recent policy announcement, which is funding for equipment upgrades and for households to refurbish or renew some of the goods that they have, that provides demand support. There has been significant monetary policy easing that also provides demand support. In terms of the property sector, they've had several measures in place, including providing more financing, cheaper financing. So also in terms of lowering mortgage rates, so that increases the demand for housing. More recently, the measure that was taken to address the large inventory of finished houses, which is by providing funding to be able to buy those finished completed homes, to convert that into affordable housing, that helps deal with this stock of inventory, that overhang that exists. And all this is quite helpful.

In terms of the additional measures that would be helpful, for example, the property sector is addressing not just the inventory of completed homes, but also addressing the other issue, which is on these pre-sold homes that remain unfinished. So that's why we talked to having a more comprehensive approach that addresses that aspect that would require central government resources for it. And in terms of fiscal policy, I think we continue to see a need for reorienting fiscal policy towards more consumption. So support for low income households can help in terms of consumption.

I'm going to ask Sonali if you would like to come in also on any of this, or also on industrial policy and so on.

MS. JAIN-CHANDRA: So if I could add on the property sector, as Gita said, there have been a slew of measures to boost the demand for housing as well as provide financing. And I think, in addition, we would welcome, if central government financing is deployed to finish the pre-sold homes. And the purpose to do that is to protect the interests of home buyers. Now, this could take the route of completing the homes and delivering them or compensating them, whichever is less costly, with appropriate safeguards.

MS. GOPINATH: On the industrial policy again, I think there is the -- this is true not just for China, but all countries that are deploying industrial policy -- I think, firstly, it's useful to have an assessment of how much support you are providing to different sectors, because sometimes support is provided in multiple different ways through multiple layers of government, and there is a lack of clarity of how much that is. So having a clear assessment of what level of support is being provided is going to be helpful. Also, so that governments can clearly recognize whether is this truly the amount of support they want to give to different sectors and the implications of that for allocation of resources, especially, over time. The more general policy of having more market-based decision making in terms of market oriented reforms is a helpful way of getting away from several of these kinds of distortions.

MS. YAN: Okay. Gentleman in the first row here. Thank you.

QUESTIONER: Keith Branch from New York Times. A currency question and an IMF quota question. The currency question, you mentioned that a more flexible exchange rate could help on deflation pressures. But we see not much of an deflation problem in the consumer price index but the fastest falling prices are export prices. Are you suggesting a flexible exchange rate be used to address these deflationary pressures when that might mean flooded exports? And then on the quota question, the suggested calculated quota shares of the IMF puts a big emphasis on the country's trade and foreign currency reserves. But China's export drive and its currency reserves accumulated over the last couple of decades, have also been part of the tensions with the West. How does the quota issue right now constrain the IMF in addressing the export drive and currency policies in China? Thank you.

MS. GOPINATH: When it comes to exchange rate policies, what we have seen, and this is evidence from multiple countries, is that allowing a flexible exchange rate helps insulate your economies better from multiple shocks. Now, there are circumstances when you could have exchange rate movements that generate financial stability risks depending upon your financial markets. And in those situations, when you are concerned about disorderly market adjustments, there can be an argument to intervene on a temporary basis. But for more general macro stability, allowing for exchange rate flexibility is helpful. In the case of China in the current context, given where inflation is - inflation is quite weak - an exchange rate depreciation can also help in raising inflation, moving away from and reducing the risk of having too low inflation.

I think the more general questions of export led growth and so on, I think we should firstly just recognize that if you look at the main contributors to growth now in China, and what's expected to be the case going forward is in terms of, you look at the net exports component, that is small. Now, yes, there is a big positive component that's coming from exports manufacturing, but there's also the imports of services that are happening at the same time. So the net export channel is quite limited in terms of the effect on growth. It's not surprising, given now the size of China's economy, growth will have to rely on more domestic factors, including raising domestic demand and what happens with domestic demand. And also in terms of all the structural aspects, what can be done in terms of raising structural growth, raising productivity. Those are going to be the sources of growth for China going forward.

On quota, so firstly, we and our membership as a whole are very pleased with having the 16th Quota Review done. That was a very important objective for 2023, was making sure that IMF goes back to, you know, becoming predominantly a quota-based financing institution. So this increase in quotas proportionately by 50 percent for everybody serve that purpose. And our members at this point are focused on completing the review, going through their domestic steps that they have to go through to actually implement it. So this is where they are focused.

But there was a second piece that came out of that discussion from the 16th Quota Review, which is the importance of recognizing the need for realignment, for the fact that the governance of the IMF should reflect the world that we live in. And there is work being done in that direction in terms of how to decide what could be realignment as a part of the 17th Quota Review. But again, I think as of now, the focus is on making sure that member countries get their 16th Quota Review through their processes, home processes, and this is actually completed.

MS. YAN: Thank you very much. Thank you, everyone. I think time is up and this concludes our press briefing. Thank you so much for joining us today, and I hope you have a nice day. And just a reminder that the recording of this press conference and the transcript will be posted on imf.org later today.