International Monetary Fund, IMF, has warned that a sharp economic slowdown in China would hit hard not only the world's second largest economy China but the rest of Asia-Pacific region also. IMF said in its Asia and Pacific Regional Economic Outlook Update released in Lima that given the sheer size of the Chinese economy, a negative growth shock there would hit the rest of Asia-Pacific region hard. The report said that such a shock could come from failure to fully implement reforms or from financial shocks and stronger-than envisaged financial linkages. It could make policy measures less effective in containing domestic financial contagion. The report added that ongoing efforts to rebalance the Chinese economy could also prove less effective than anticipated, leading to a sharp drop in demand. The report also said that a sharp slowdown in China would pose regional growth risks through strong trade linkages and increasingly through impacts on financial market sentiment.