SYDNEY (Reuters) – Australian Treasurer Jim Chalmers said on Sunday the government was closely watching China amid “concerning” signs of economic weakness that could weigh on Australia’s economy.
“I share the pretty substantial concerns that people have voiced about the Chinese economy,” Chalmers told Sky News television.
“It is concerning to see the weakness, the softness, in the recent weeks and months in the Chinese economy because it has obvious implications for us here in Australia.”
Recovery in China, the world’s second-largest economy, has sputtered due to a worsening property slump, weak consumer spending and tumbling credit growth, prompting the authorities to slash interest and promise further support while analysts downgrade growth forecasts.
China is the top trading partner for raw-materials exporter Australia, with annual trade of A$285 billion, although Canberra has urged exporters to become less reliant on China amid diplomatic tensions.
“In China they’re dealing with slower growth, they’ve got deflation, there are concerns in their property sector and to some extent in their banking sector, their exports have slowed as well, Chalmers said. “Our concerns for China in particular is something that we’re monitoring very closely.”
Australia’s growth “will be substantially weaker” due to China’s slowdown and Australian interest rates rises, he said.
The Reserve Bank of Australia left rates unchanged in August for a second straight month after raising them by 4 percentage points over 16 months to rein in inflation.
“The overall direction of travel is pretty clear – our economy is weakening,” Chalmers said.
Australia’s economy grew 0.2% in the first quarter, its slowest in 1-1/2 years as high prices and rising interest rates sapped consumer spending.
(Reporting by Sam McKeith in Sydney; Editing by William Mallard)