IMF and Joe Biden Both Question China's Economic Growth Prospects

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Vice President Joe Biden and Chinese Vice President Xi Jinping.
Vice President Joe Biden and Chinese Vice President Xi Jinping.

On Monday, the International Monetary Fund (IMF) forecast that China's economic growth could decelerate to 8.2 percent this year, below its prior forecast of 9 percent from September 2011.

The Eurozone debt crisis, which risks plunging the world into economic recession, will hit China hard, according to the IMF's China Economic Outlook. A weaker global environment and a decrease in exports would be to blame, although China does have fiscal measures to counter such a downward pull.

IMF forecast coincided with U.S. Vice President Joe Biden's own negative remarks concerning China's economic growth.

Biden offered an alternative reason as to why China's economic growth could not be sustained. While delivering a speech promoting President Barack Obama's college tuition program at Florida State University, Biden made some reportedly unscripted remarks criticizing China's one-child policy. Calling it God-awful, Biden went on to claim that this policy would dramatically affect China's growth.

Because of that God-awful one-child policy they have, what happens now is in the next 20 years they're going to have such an inverse proportion of the number of people working to the number of people retired that there is no way they can sustain that growth, he said.

Biden's premise is that with the one-child policy, in future generations, China is likely to have a shrinking labor force that will have to financially support a massive pool of aging and retired Chinese. Consequently, China's economic growth would begin to slow because there will not be enough people to sustain the production of goods and services and concurrently support an large, retired workforce.

China's one-child policy was established in 1979, under Deng Xiaoping's rule. The policy was enacted in an effort to alleviate the strain on the country's resources, including food supply, imposed by the country's huge population. The policy requires Han Chinese, the majority ethnicity in China, to have only one child. If breached, parents with a second child generally suffer enormous fines.

Although a valid argument, Biden's criticism comes at a sensitive time -- a week before Xi Jinping, President Hu Jintao's expected successor, plans to visit the United States.

Vice President Biden's remarks about China were meant to reinforce the assertion that the United States would continue to be better positioned than any other country in the world to lead the 21st century.

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