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Crisis in China’s economy may be global problem — minister

June 22, 17:11 UTC+3 MOSCOW
According to the minister, problems in Southeast Asia cannot be compensated now by support from Europe and the United States
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© AP Photo/Andy Wong

MOSCOW, June 22. /TASS/. Recession in China’s economy will influence on the global market more seriously than the world’s crisis of 2008-2009, Russia’s Deputy Finance Minister Maxim Oreshkin told TASS on Wednesday. The Finance Ministry believes this scenario is of low probability so far but addresses such risks in its policy, the official said.

"The risk is in place that attitude of financial markets and investors towards China, including the real sector of the economy, may enter a negative spiral. If the situation proceeds under such scenario, we may even see the recession in China. This scenario is so painful that we cannot neglect it. The crisis in China and its immediate spread in the Southeast Asia may be even more severe from the standpoint of global economic growth than the world’s financial crisis," Oreshkin said. Problems in Southeast Asia cannot be compensated now by support from Europe and the United States, he added.

This scenario is not highly probable, about 5-10%, the official said. Still, the economic policy should be ready for any scenarios, he added.

The GDP growth rate is gradually slowing down in China now, to 6.9% in 2015.

US Federal Reserve rate increase

According to the deputy mnister, the US Federal Reserve rate hike may indirectly impact Russian economy through problems in China’s economy.

"The Federal Reserve rate increase will mean world’s economic growth rates are slowing down, similarly to commodities demand. Strange though it may be but the Federal Reserve Rate growth may affect Russia through China. China’s economy is sensitive to the Fed rate because it depends on the capital inflow," Oreshkin said.

Nevertheless, global expectations in respect of China’s economy are guarded yet positive, the official added.

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