The IMF estimates that China has five years to reform its financial system to keep it effective, a top IMF official said on Friday.
“You never had an economy this big, this systemic, with this kind of financial system,” IMF mission chief for China Nigel Chalk said at a conference at a Washington think tank.
Without reform, he said, China risks promoting investment bubbles, particularly in the housing market, because of significantly low interest rates.
Chalk described the Chinese financial system as “very bank-based,” fed by “very high savings,” and tightly controlled by the government, he told a Carnegie Endowment for International Peace forum.
Chalk said that the state’s control of the system, useful so far to boost Chinese economic growth and to contain inflation and speculation, is at risk of losing its effectiveness with the emergence of unregulated financial institutions.
“We see that there’s a risk continuing on the current path. It’s not an immediate risk, but it’s a present risk on a, say, three-to five-year horizon that the main macroeconomic controls that they have at their disposal actually become much more diluted in their effectiveness,” he said. “Because the cost of capital is too low and is becoming increasingly low in real terms, that just facilitates more and more investment. And at some point you get at the end of the road.”
With the midday sun blazing, an experimental orange and white F-16 fighter jet launched with a familiar roar that is a hallmark of US airpower, but the aerial combat that followed was unlike any other: This F-16 was controlled by artificial intelligence (AI), not a human pilot, and riding in the front seat was US Secretary of the Air Force Frank Kendall. AI marks one of the biggest advances in military aviation since the introduction of stealth in the early 1990s, and the US Air Force has aggressively leaned in. Even though the technology is not fully developed, the service is planning
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