Australia is concerned about China’s economy, monitoring it 'very closely’

Australian Treasurer Jim Chalmers poses for a photo as he arrives to attend the G20 Finance Ministers and Central Bank Governors meeting in Gandhinagar, India on July 18, 2023. REUTERS/Amit Dave Get license rights

SYDNEY, Aug 27 (Reuters) – Australian Treasurer Jim Chalmers said on Sunday the government was keeping a close eye on China amid „significant” signs of economic weakness that could affect Australia’s economy.

„I share the considerable concerns that people have voiced about the Chinese economy,” Chalmers told Sky News television.

„It’s worrying to see the weakness, the softness in the Chinese economy in recent weeks and months, because it has obvious implications for us in Australia.”

In China, the world’s second-largest economy, a worsening asset slump, weak consumer spending and falling credit growth prompted officials to cut interest rates and ensure more support as analysts downgraded growth forecasts.

China remains raw material exporter Australia’s primary trading partner, although Canberra has urged exporters to rely on China amid diplomatic tensions.

„In China they’re dealing with slower growth, they’ve got deflation, they’ve got concerns in their property sector and to some extent in their banking sector, their exports are down, Chalmers said. „Our concerns about China in particular are something we’re watching very closely.”

He said Australia’s growth would be „significantly weaker” due to China’s slowdown and rising Australian interest rates.

The Reserve Bank of Australia left rates unchanged in August for the second consecutive month after raising 4 percentage points in 16 months to control inflation.

„The overall direction of travel is very clear — our economy is weakening,” Chalmers said.

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Australia’s economy grew 0.2% in the first quarter, the slowest in 1-1/2 years as higher prices and rising interest rates dampened consumer spending.

Reporting by Sam McKeith in Sydney; Editing: William Mallard

Our Standards: Thomson Reuters Trust Principles.

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