China to be hit hard by global recession

A global recession will have a huge impact on China’s economy while currency volatility is expected to add further pressure on the country’s banks, a top executive at Bank of China (BOC) said on Saturday.

‘Next year, the global economy is very likely to enter recession and the world’s biggest economies, including the United States, Europe and Japan, are very likely to post negative growth and that will have a huge impact on China,’ executive vice president Zhu Min told a financial conference in Shanghai.

‘The impact of the crisis on China has just started to appear as China has already seen a sharp slowdown in industrial profit growth and fiscal income,’ he said.

‘The financial crisis will technically precede economic and political turmoil by eight to 12 months,’ he added.

China’s banks have enjoyed robust profits for years as the country boomed but earnings growth is now slowing as the economy cools from the impact of the global financial crisis.

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