A sharp downturn in Europe could cut China's economic growth rate nearly in half, the International Monetary Fund said on Monday, adding to warnings about a possible severe global slowdown this year.

The IMF said Beijing should be ready to launch a multibillion-dollar stimulus to ward off a slump in the world's second-largest economy.

The IMF is forecasting 8.2% growth this year for China but said that could be reduced by up to four percentage points if Europe's crisis causes large declines in credit and output.

"The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere," it said. "In the unfortunate event such a downside scenario becomes reality, China should respond with a significant fiscal package, executed through central and local government budgets."

China rebounded quickly from the 2008 global crisis and its economy expanded by a healthy 9.2% last year but growth has declined as Beijing tightened credit and investment curbs to prevent overheating.