Slow down in China could have 'very big impact' on New Zealand economy

A leading economist is warning a fall in the Chinese economy is more dangerous to the global economy - including New Zealand's - than a US downturn.

Economist Shambeel Eaqub told TVNZ1's Breakfast today, New Zealand's "deep connection" with China was far bigger than the US when it comes to consumption.

The Chinese economy has "a real impact" with its connection to New Zealand, including exports Eaqub said.

"If you look at our consumption, the things that we buy, so much of it is made in China or part of it is made in China, so it really matters."

It has been "a bumpy ride" in the past few months in the stock markets, particularly the Chinese stock markets, Eaqub said. "It's been a terrible performer over the last year."

"We've seen a lot of concerns, we've seen the Chinese economy slowing from very fast rates to merely fast, and we've seen all the worries around Europe, Brexit, and of course Trump in America."

In the last global financial crisis (2008), it was China that powered the recovery, Eaqub said.

"If it hadn't been for China then the global recession would have been much deeper.

"If we don’t have a Chinese engine that’s running strongly, then if there is a risk of global downturn, then we’re probably going to get a much worse one."

China is New Zealand's top trading partner, especially over the past 20 years, Eaqub said.

New Zealand was "very deeply connected to China" in sectors, including tourism, dairy, meat and forestry.

"A slow down there would have a very big impact, both in terms of how much they want from us, but more importantly I think it will bring down prices so farmers have to be really careful about planning their future," he said.

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Economist Shambeel Eaqub says our economy depends on the “Chinese engine running strongly”. Source: Breakfast