Treasurer Joe Hockey is confident the global economy is not on the cusp of a crisis as Australian shares rallied from an initial sell-off on Tuesday.
In the first hour of trading the ASX zig-zagged around its previous close, defying concerns the market was facing another four per cent beating.
On Monday some $60 billion was wiped off the market - its worst performance in six years - as investors feared a slowdown in the Chinese economy would have a ripple effect across the globe.
On Wall Street, US shares tumbled just under four per cent by the close on Monday while in Europe markets were around five per cent lower.
Mr Hockey sought to soothe investor nerves, saying "to be calm is good advice".
He also noted the Chinese market was still more than 40 per cent higher than a year ago despite the fact the economy has slowed down a "little bit".
"People are speculating that it won't grow at seven per cent, now that's ridiculous," the treasurer told 3AW radio.
"If it grows at 6.5 per cent or six per cent, anywhere in that range indicates the Chinese economy is still growing quite strongly."
Mr Hockey believes the steep sell-off in world markets is a correction rather than a crisis, partly caused by "flighty money" resulting from low interest rates switching from stocks to bonds in anticipation of the US Federal Reserve raising interest rates.
Locally, new figures showed consumer confidence eased 0.2 per cent last week, although the ANZ-Roy Morgan gauge did not capture Monday's share rout.
The treasurer says the global fundamentals are positive, with potential higher interest rates in the US a sign that economy is improving, while Europe and Japan are growing.
"The fundamentals are strong," Mr Hockey said.
Opposition Leader Bill Shorten agreed the economies of both Australia and China were strong.
"But I think we have a weak government," he told reporters in Brisbane.
"Everything they touch in the last two years, be it captain's picks right through to economic policies, has turned bad."
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