Finance Minister Bill Morneau says China’s instability could be particularly bad news for the Canadian economy. Add to that the plummeting oil prices and the economy is in a tentative state.
However, it’s not just Canada that China’s actions could affect. Their slowed economy could tip the global economy into another recession.
Currently, China is taking on more debt to repay existing interest and last week officials in the country cut interest rates on loans by small lenders that finance entrepreneurs. It’s not doing as well as it once was and with trade ties and production chains existing between many countries, should China’s economy continue to slide then the rest of the world could be affected.
According to CTV News, Morneau said the government is keeping an eye on China and considering what that could mean for us.
Speaking to CTV’s Question Period, Morneau said: “China, of course, has a really significant impact on commodities and on oil prices. So it has a double impact on Canada.”
This comes after the Prime Minister Justin Trudeau met Chinese President Xi Jinping for the first time earlier this month. Trudeau said he wanted to renew the relationship between the two countries citing the many collaborative opportunities in terms of politics, the economy and culture.
However, China has cut its growth target for 2015 to 7%, the lowest in many years. Many speculate it will struggle to even achieve that. This could have a knock on effect for those countries working with China.
Aside from keeping a watchful eye, the minister says the government needs to consider other ways of obtaining more Canadian oil for the market. He said the government is committed to keeping the promises it made regarding the economy.
“It’s about getting at the things that are going to have the biggest impact,” said Morneau. “That means being careful about where you invest and not doing it for politically-expedient reasons, but doing it for reasons that are going to benefit this generation, and the next generation, and the one after that, by making our country better.”
In his annual “Fall Fiscal Update,” the Finance Minister said the Canada’s economy and federal government finances had deteriorated sharply in the last year. Estimated growth is now only expected to be 1.2% as opposed to the 2% originally forecast.