BEIJING (Reuters), – China’s economic recovery has been well advanced, but is skewed by weak consumption. The International Monetary Fund also warns of the uncertainties caused by regulations cracking down on technology and slowing productivity.

The IMF released a report Friday after its 2021 Article IV consultations with China, stating that weaker consumption as well as a lower base of comparison and headwinds resulting from stagnant real estate investment would be the key barriers to growth.

China’s recovery has been well-advanced, but there is a lack of balance, and momentum has slowed,” the report said. It cited COVID-19’s effect on consumer spending, and remarked that Beijing’s attempts to deleverage this sector had caused a downturn in property markets.

IMF predicts that the second-largest world economy will expand by 4.8% in 2022, and 5.2% 2023. That’s down from last year’s 8.1% growth.

In the months ahead, the People’s Bank of China will take strong support measures to help stabilize an economy that is in decline. China experienced a robust recovery after the pandemic-induced slump, but the country’s growth was much slower in the second half.

IMF reported that there was a rush of seemingly uncoordinated regulatory actions taken against tech firms and other industries. These are seen in the market to be “undercutting private enterprise’s role.” It also called for more transparency and predictability.

China launched last year a crackdown on tech companies, private education firms and other businesses, targeting unfair competition and data governance.

According to the IMF, such reforms may help grow but could damage market sentiment. This could lead to lower investments.

In addition, the IMF called for fair competition between China’s state-owned enterprises and private companies. This is necessary to combat slow productivity growth.

According to the report, Chinese officials stated that external decoupling pressures were creating critical headwinds for productivity growth, which necessitates an increase in SOEs’ involvement in strategic sector.”

China has warned about the risks of “decoupling” its economy from that of the United States, amid rising tensions between these two countries.