The International Monetary Fund said Monday that its forecast for 8.2% annual growth for the Chinese economy in 2012 could be cut nearly in half if Europe’s debt crisis tips the world economy into a recession, Reuters reported. The fund cut its forecast for 2012 growth from 9% in February, and it now says growth could fall by around four percentage points in its “downside” scenario. In the event of a dramatic slowdown, China should turn to fiscal stimulus measures including cuts in consumption taxes, subsidies for consumers and corporate incentives to encourage investment, which could mitigate the decline in economic output by up to 3% of GDP, the fund recommended. US Vice President Joe Biden also warned against irrational China-related exuberance on Monday when he said that China’s growth would inevitably slow due to the country’s “God-awful” one-child policy. “When you talk about, we have a problem with our entitlement programs, we are going to be able to hand that, but by God, thank God we don’t have your problem,” Biden said.
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