China’s vice-premier and head of finance has predicted that the global economy will slip into long-term recession and warned that China will need to deepen its financial reforms to cope with the fallout.

“Now the global economic situation is extremely serious and in a time of uncertainty the only thing we can be certain of is that the world economic recession caused by the international crisis will last a long time,” state media reported Wang Qishan as saying over the weekend. His unusually bearish comments could set the stage for domestic monetary loosening as Beijing frets about a deflating property bubble at home and chronic economic woes in China’s two largest export markets – Europe and the US.

They also reflect policymakers’ concern that the country’s under-developed financial sector is facing heightened risks from a gathering economic slowdown.