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This is the true test of China’s economy: Rogoff

Plummeting oil prices and the stock market's dismal 2016 start has done little to calm people bearish on China, especially Harvard economics professor Kenneth Rogoff. Whenever oil moves this much, it's bound to create problems in the global economy, he said Tuesday.

"The markets wildly underrated the chances of a more significant slowdown in China," Rogoff told "Worldwide Exchange" on CNBC. "The concern in China is that everyone always says, 'Of course there will be a soft landing.' And there might be, but it's not that easy to manage."

China poses the next big question, Rogoff said, citing government opacity and mounting debt. "We don't know what's going on, it's hard to know how quickly this could reverse."

Read More Gartman: Oil 'panic' could sink prices to $15

Signs from commodities like oil trading around 12-year lows could be a reliable test for the health of the world's second-largest economy, Rogoff said. "In some sense the low commodity prices are as much of a measure of what's going on as any of the official numbers."

But the former former IMF chief economist said it's not all gloom for the Chinese economy because of the country's willingness to reach into its toolbox. "They have a lot of reserves, they're willing to socialize a lot of the losses beyond what most countries are willing to do."

"I certainly wouldn't count them out," he said.

Another nation reeling from the global oil glut is Saudi Arabia. The country took austerity measures in the latest 2016 budget released by the Saudi Ministry of Finance last week, and may list some assets of its state-owned oil giant Saudi Aramco.

Read More Saudis failing to drown US with oil: Harold Hamm

"They're normally very patient as a long-run player but right now, they're sort of hanging on for dear life," said Rogoff, a member of the Economic Advisory Panel at the New York Federal Reserve. "That's one of the factors I think of why they're pumping out oil so fast."

Oversupply and the prospects of a sub $30-per-barrel environment have been tough on oil-producing countries, and the United States in no exception. Yet conditions are complicated, Rogoff said, pointing out that the difficulties of cheap prices for American oil producers can be a boon to consumers at the gas pumps.

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