Finance Minister Bill Morneau says the Liberal government is keeping a close eye on China鈥檚 financial problems and what they could spell for an already-slowed global economy.
鈥淲e鈥檙e very keenly interested in what鈥檚 going on in China and recognizing that their pace of growth is slowing,鈥� Morneau told CTV鈥檚 Question Period. 鈥淭hey鈥檙e having a really material impact on global growth, so it鈥檚 something to watch.鈥�
Experts are warning that China鈥檚 slowed economy may push the already-unstable global economy into another recession. said that Chinese borrowers are taking on 鈥渞ecord amounts of debt鈥� to repay interest on their existing financial obligations. Bloomberg cited Hua Chuang Securities Co., which predicts that the amount of loans, bonds and shadow finance arranged to cover interest payments will rise five per cent this year.
and lowered the amount of reserves banks must hold, indicating domestic concern about the country鈥檚 economic problems.
Morneau said China鈥檚 instability could be particularly bad news for the Canadian economy, which is already dealing with the effects of plummeting oil prices.
鈥淐hina, of course, has a really significant impact on commodities and on oil prices. So it has a double impact on Canada.鈥�
The minister said the government is looking for new ways to get more Canadian oil to market, especially given U.S. President Barack Obama鈥檚 recent rejection of the massive Keystone XL pipeline project.
鈥淥bviously we were disappointed that the U.S. said that they weren鈥檛 going to approve Keystone. So, now we鈥檙e going to need to think about other ways to achieve the same goal. We are working in that regard and will continue to do so.鈥�
Morneau said the government is committed to keeping its economic campaign promises, even in a 鈥渓ow-growth environment.鈥� He said the Liberals鈥� plan to do so through major infrastructure investments, which will create jobs along the way, as opposed to shorter-term, pork-barrel projects.
鈥淚t鈥檚 about getting at the things that are going to have the biggest impact,鈥� said Morneau. 鈥淭hat 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.鈥�
that the government inherited far more debt than expected from the previous Conservative government, downgrading Canada鈥檚 overall growth from two per cent in April to 1.2 per cent. The government鈥檚 full economic forecast will be outlined in its first budget; Morneau said the government hasn鈥檛 decided when that will be.
