China’s growing debt mountain poses a risk to Australia’s financial stability, a senior politician has warned, just weeks after the continent celebrated a quarter century of growth without a recession.
China is Australia’s largest trading partner, accounting for A$150bn of two-way trade in 2015. Beijing is also an important foreign investor in Australia, leaving Canberra potentially among the developed nations most exposed to a Chinese downturn. China’s growing debt in its local government and state-owned enterprise sector were potential vulnerabilities that could end up having an impact on the continent, Scott Morrison, Australian treasurer, said in an interview with the Financial Times.
“We are not rose-coloured-glasses optimists about China,” Mr Morrison said. “We have a practical and real appreciation about what some of their vulnerabilities are.”