The International Monetary Fund recommended...>

CHINA: The International Monetary Fund recommended Thursday that China tighten

regulation of its financial sector as risks continue to rise amid rapid growth

of the sector.

- Expansion of monetary and fiscal policies, regulatory arbitrage by financial

institutions mixed with a rise of their offerings of increasingly complex

investment vehicles, and the proliferation of implicit guarantees for financial

products pose risks to China's financial system, the IMF said in its latest

Financial System Stability Assessment (FSSA) of China.

- The FSSA, released every five years, aims to identify major financial risks

and offer recommendations for better policy making to enhance its economic

resilience.

- Government initiatives to buoy job creation and domestic growth, especially by

local governments, have hindered the closure of "non-viable firms" and allowed

substantial credit growth that has fueled a sharp rise in corporate and

household indebtedness, the Fund said.