The International Monetary Fund has warned that time is running short for China to implement critical economic reforms as the government, banks and companies come under mounting strain from rapid and unbalanced growth.

In its annual report on the Chinese economy, the IMF sounded a more cautionary note than previously. It said it was “increasingly urgent” for China to shift away from its growth model which relies heavily on credit and investment.

It said the model was “not sustainable and is raising vulnerabilities” and that “while China still has significant buffers to weather shocks, the margins of safety are diminishing”. China’s new leaders, who took the reins in March, have vowed to step up reform efforts, but have yet to make any significant moves.