Treasurer Scott Morrison insists China will do whatever it takes to keep its economy growing, as a global forecaster warns a sharp Chinese slowdown could tip Australia into recession.
Mr Morrison said the fact that China has slowed to an annual growth pace of 6.9 per cent, its lowest in 25 years, should not be a great shock.
"The fact that China is slowing down is a bit like predicting tomorrow morning's sunrise," he said in his first address to the National Press Club as treasurer.
But he was confident China remains committed to expanding its economy.
"They will do what they need to do to ensure growth in their economy."
Mr Morrison will get a greater feel for China's outlook and the world economy more broadly when he travels to Shanghai next week for a G20 meeting of finance ministers and central bank governors.
His comments came as forecaster Oxford Economics warned Australia could dip into a temporary recession this year if there is a marked slowdown in China.
Oxford Economics says two buffers would help shield the economy from a prolonged recession - an anticipated 10-cent drop in the Australian dollar and the Reserve Bank having to slash the cash rate by 175 basis points to 0.25 per cent by September.
The warning came as the forecaster cut its 2016 world growth prediction to just 2.3 per cent from a previous estimate of 2.6 per cent made in January, which would be the slowest rate since 2009, and reflecting downgrades to the US, the Eurozone, Japan and some emerging markets.
Its modelling also suggests a hard landing in the Chinese economy would result in the iron ore price tumbling to $US23 per tonne from around $US48 now, Australia's terms of trade falling further and a blowout in the federal budget.
"As a large net exporter of commodities, Australia is doubly exposed to weaker regional trade flows, as the latter would depress both export volumes and export prices," Oxford Economics senior Asia economist Sian Fenner said.
Separately, Westpac's monthly leading economic index pointed to sluggish growth in Australia over at least the next three to nine months.
Treasury and the Reserve Bank in recent months have both downgraded their potential growth forecasts for Australia to 2.75 per cent.
Westpac had also anticipated annual growth to be running at 2.75 per cent in the first half of this year.
"The signal from the leading index is increasingly pointing to downside risks to that forecast," Westpac chief economist Bill Evans said.
