China's economy is expected to contribute around a quarter of global growth this year, said a senior official with the International Monetary Fund.

And if recent tariff rollbacks and strong first-quarter growth momentum can be maintained, the Chinese economy may grow even faster this year than previously anticipated.

The IMF encourages China to launch even more economic stimulus measures to address the immediate challenges of subdued demand, which could be exacerbated by the ongoing external shocks, said Marshall Mills, the IMF's senior resident representative in China.

In an exclusive interview with China Daily on the sidelines of the 2025 Tsinghua PBCSF Global Finance Forum over the weekend, Mills said there could be an upward revision of the fund's 2025 economic growth forecast for China, citing stronger-than-expected first-quarter GDP growth and recent tariff reductions between China and the United States.

"With these positive developments, there is a potential upside. We'll have to look at all the factors together and provide an updated forecast in due course," Mills said, adding that China's economy is expected to contribute around 25 percent of global growth this year.

In April, the IMF's World Economic Outlook revised down China's GDP growth forecast for this year to 4 percent from 4.6 percent, as part of its broader downgrades that cut the global growth forecast to 2.8 percent from 3.3 percent amid a swift escalation of trade tensions. The fund is scheduled to provide its WEO update in July.

Mills said the easing of tariffs between China and the US and their efforts to engage in further trade talks were in sync with the fund's overall encouragement for countries to work constructively together and ensure a level playing field in trading relations.

"We encourage countries to continue to pursue trade settlements to reduce trade tensions and uncertainty, which is costly," he said, adding that all countries should preserve openness in trade.

The lingering external uncertainties have increased the urgency for China to go further on stimulus measures to shore up domestic demand, Mills said, adding that fiscal measures in this regard should be carried out with a "the sooner the better" urgency.

The desirable fiscal moves should be led by the central government and include reforming the fiscal system to strengthen the social safety net — especially for vulnerable groups — as well as "forceful action" to correct property sector problems, he said.

"We've recommended that the central government step in with significant resources to resolve the problem of presold but unfinished housing, either through financing the completion or compensating at least partly those still unable to occupy the homes," Mills said.

Another key possible step would be for local governments, perhaps with central government backing, to purchase some of the completed but not yet sold housing inventory and resell it to vulnerable, low-income groups, he said.

If the challenge of subdued inflation persists, authorities can continue down the road of monetary policy relaxation, following up on the recent easing, Mills said.

"The subdued inflation, in our view, is a result of weak domestic demand. We do believe that decisive, forceful policy action can address this problem and that inflation can return to healthy levels (in China)," he said.

On the broader impact on individuals as a result of trade tensions, Mills emphasized the need for targeted support measures to assist those affected.

In the medium term, China needs to deepen reforms to create a more stable, predictable regulatory environment for the private sector and provide it with a level playing field, especially in the services sector, Mills added. Such efforts are crucial for improving China's productivity and growth outlook, which still faces headwinds due to factors including population aging despite the country's recent advancements in artificial intelligence.

Mills said that China has a growing role in the international monetary system via the increased use of the Chinese yuan globally.

"China has made substantial progress in the international use of the yuan, particularly in trade," he said, which is a market-driven outcome that is likely to continue as the country's role in the global economy and trade continues to grow.

Tan Guoling contributed to this story.