Kudlow: China’s economic problems worse than expected

Economist Larry Kudlow said in an interview broadcast on Sunday that the recent turmoil in China’s economy shows no signs of slowing down.

“It looks like the China story is going to be worse than anyone thought,” he told host John Catsimatidis on “The Cats Roundtable” on AM 970 in New York.

{mosads}“We don’t know where the bottom is,” Kudlow, who is mulling a Senate run, added.  “It’s knocking down commodities and hurting profits.  It’s not devastating, but we have issues.”

Kudlow argued on Sunday that China’s market instability is having a ripple effect on the rest of the globe.

The conservative commentator added that he does not foresee Beijing’s volatility escalating into an international economic incident.

“China is not the whole world but China is important,” Kudlow said.  “I don’t see a catastrophe out there.”

“Profits have been flat for the last year or so,” he said of the overall stock market.  “[But] I don’t see banks going down the drain.  I don’t think this is the end of the world just yet.”

Kudlow charged that one way the U.S. can weather financial stability overseas is by taking better advantage of its energy resources.

“We are pretty close to being independent in terms of energy,” he said.   “North America is a powerhouse and energy independence is a big part of that.”

“Let’s not tear it apart,” Kudlow added.  “Let’s make great use of it for prosperity.”

President Obama is hosting Chinese President Xi Jinping for a state visit in Washington, D.C. later this month.

Xi’s visit comes as the two nations have recently butted heads over China’s manipulation of its currency, the Yuan.

Critics have argued that China’s monetary policies create extra chaos in the world’s economy.

Beijing has countered that it can handle its currency however best serves its interests independent of other marketplaces.