China’s currency remains undervalued and continued government control of its financial system remains one of the central risks to the country’s economy, International Monetary Fund acting managing director John Lipsky said at a speech in Beijing on Thursday morning.

As the IMF concluded its latest review of China, Lipsky said it was clear that China’s role in the world economy had become central enough that its policies could either help or hurt the rest of the world. No longer just a processor of manufactured goods ordered abroad, China “has the ability to transmit real sector shocks through the global economy but to originate those shocks as well.”

The IMF is paying closer attention this year to the ways in which problems in one country can cascade through the global economy — an exercise triggered after the 2008 financial crisis in which problems with roots in the U.S. housing market led to banking crises and recessions on other continents.

China’s authorities keep close control of the country’s financial sector, which is dominated by state-owned banks that face limits on the interest rates they can pay to depositors and charge to borrowers. The value of China’s currency, the renminbi, is closely managed — kept inexpensive compared with the dollar in order to boost exports — and the flow of capital into and out of the country is restricted.

Those rules form a key lever of state control that encourages cheap lending to government-owned industries and effectively transfers wealth from households to state-controlled banks. Liberalizing the system has become a main focus of U.S. officials who feel the country should allow the value of its currency to float freely on world markets, allow banks to compete and allow investors and households to move capital more easily.

Lipsky cited potential problems in the country’s financial sector as a main concern in a country that is overall a “bright spot for global growth.”

The full report on China will not be released until it is reviewed by the IMF board in the coming weeks, but Lipsky said the fund expects China’s economy to continue growing at about 9.5 percent, and predicts inflation will begin to decrease. Rising prices have been a main concern of Chinese officials sensitive to the potential for social instability if food and fuel costs increase too rapidly.

However Lipsky said the country needed to move more quickly on its plans to encourage more domestic spending and in opening its financial sector.

Chinese officials have agreed they need to rely less on exports to places such as the United States as a source of growth, and have moved to raise wages, expand pension benefits and taken other steps to raise local spending.

However although reform of the financial sector is also a formal goal, change has been slow. Lipsky said the complex set of government regulations needed to reach a sometimes conflicting set of goals — simultaneously controlling the movement of capital, the value of the currency and the interest rates banks can charge — risks broader problems in the world’s second-largest economy.

“China still confronts the risk of a build-up of financial sector vulnerabilities. The complexity of the system is growing,” Lipsky said. “A strengthened financial system would help to transform China’s growth model toward a more inclusive economy that is focused on improving people’s standard of living.”