IMF Forecast China’s Economic Growth May Have a Big Drop

On Monday, the International Monetary Fund released a report forecasting that China’s economic growth could experience a substantial decline if Europe’s growth falls more than anticipated.

The China Economic Outlook published on Monday showed that China’s growth rate may lose about four percentage points from its current predicted growth, which the International Monetary Fund forecasted at 8.2 percent, as of earlier this year.
The IMF issued a report last month showing that the world economy may decrease by one point seven five percent in total growth.

According to The Wall Street Journal, the ratings agency Fitch Ratings said the Chinese economy’s hard landing was “potentially the biggest risk for the global economy in 2012.”

City University of New York economics professor Chen Zhifei said the Chinese economy’s “hard landing” is inevitable, and that the impact of the economic slowdown would include soaring inflation and unemployment, as well as the collapse of the banking sector.

[Chen Zhifei, Economics Professor, City University of New York]:
“The consequence is unimaginable. The impact on the world economy will be huge, especially in China.”

In addition, Professor Chen also believes that the largest and the most fundamental impact may be reflected in the Chinese regime. Because GDP growth is the biggest political task of the Chinese regime, it gives the regime an excuse to maintain its single party dictatorship.

[Chen Zhifei, Economics Professor, City University of New York]:
“If this excuse becomes invalid, it will bring political instability in mass incidents that will force the Communist Party to withdraw from the world stage.”

The International Monetary Fund urges the Chinese regime to respond with a “significant fiscal package” to sharply stimulate its economy.