A funding crisis battering China's big property developers could start to shake the wider economy and global markets, the IMF warned on Friday, saying deeper reforms were needed to fully curb the threat.

The International Monetary Fund's report comes as property firms in the world's second-biggest economy struggle with liquidity problems as Beijing looks to curb excessive debt and rampant consumer speculation in the sector.

Among those embroiled in the crisis is Evergrande, one of the country's largest developers, which is involved in restructuring negotiations after racking up $300 billion in liabilities.

Multiple other Chinese developers have also defaulted on bond payments in recent months, piling pressure on the wider economy and rattling investors.

"Property plays a large role in both China's economy and financial system, accounting for about a quarter of both total fixed investment and bank lending over the past five years before the pandemic," the IMF said in a report released on Friday.

It warned that with developers beyond Evergrande also facing funding problems, there were "concerns of negative spillovers to the broader economy and global markets".

A sharper-than-expected slowdown in real estate "could trigger a wide range of adverse effects on aggregate demand, with feedback loops to the financial sector," the IMF said.

Should there be a sudden slowdown in China's growth, this would also create spillovers via trade and commodity prices, the fund added.

The institution this week lowered its 2022 growth forecast for China to 4.8 percent, down 0.8 points from earlier estimates.

Although China's recovery is "well advanced", it lacks balance and momentum has slowed -- partly due to lagging recovery in consumption amid recurrent virus outbreaks -- the IMF said.

China, where the coronavirus first emerged, remains one of the few places left in the world pursuing zero-Covid infections.

Its strategy of rapid lockdowns and mass testing is facing challenges with new virus variants becoming more transmissible, while repeated local outbreaks have weighed on a full resumption of pre-Covid activity.

The IMF noted that the pandemic will likely continue hampering China's consumption recovery before easing in 2023, but this likely requires "more efficacious vaccines and relaxation in the zero-tolerance strategy".

Earlier this week a senior IMF official called for China to begin to "recalibrate" its aggressive anti-Covid policy to ease the negative impact the pandemic continues to have on global supply chains and economic growth.

But Beijing responded by saying its coronavirus approach has achieved "significant results" and that the country remains a key driver of global growth.

Hong Kong economy grew by 6.4 percent in 2021: govt
Hong Kong (AFP) Jan 28, 2022 - Hong Kong's economy grew by 6.4 percent in 2021 but the city warned that anti-Covid measures in response to the latest outbreak may stifle further recovery, a government spokesperson said on Friday.

The rise marks Hong Kong's first annual growth of gross domestic product after two years of recession, with the city roiled by democracy protests in 2019 and the coronavirus pandemic the year after.

GDP rose by 4.8 percent in the last quarter of 2021 compared to the previous year, capping off a year where Hong Kong's economy saw an overall rebound.

"The Hong Kong economy recovered further in the fourth quarter of 2021 thanks to robust export performance and improved private consumption," a government spokesperson said in a statement on preliminary GDP estimates.

Besides a double-digit jump in exports, Hong Kong also saw a spike in private consumption spending, an improved labour market and a government stimulus programme.

Like mainland China, Hong Kong adheres to a "zero-Covid" policy with strict anti-epidemic measures, which kept the city largely virus-free last year at the cost of deepening international isolation.

But the finance hub is struggling to contain outbreaks involving the highly transmissible Omicron variant, with confirmed cases setting a new daily record this week.

Hong Kong leader Carrie Lam on Thursday announced that anti-epidemic measures and travel curbs -- including a ban on flights from eight nations -- will be extended by two weeks.

"The latest wave of epidemic and the tightened anti-epidemic measures have posed renewed pressures on economic activities and weighed on sentiment," the spokesperson said, adding that Hong Kong's economic prospects in 2022 could also be affected by high inflation in major economies and tensions between China and the United States.

Private consumption expenditure increased by 5.7 percent from 2020, according to the data, with exports and imports rising by 19 and 17.5 percent respectively.

Last June, the Hong Kong government announced that residents would each receive HK$5,000 ($642) in electronic consumption vouchers, with the programme costing over HK$36 billion in total.

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