The effects of the eurozone's debt crisis
have been spreading at an obvious pace to Asian countries, a former senior
banking official warned on April 2.
And the
region's economic growth is not expected to regain momentum in the short term,
said Liu Mingkang, former chairman of China Banking Regulatory Commission, who
was attending the Boao Forum for Asia in Hainan province.
"The
economic performance of major Asian countries has remarkably deteriorated since
last year, proving the debt crisis has affected the area in obvious ways,"
he said.
Liu
said China, Japan and other large Asian countries must move more quickly to
reform their economies if they are to counter the harm that is being done by
the eurozone's debt troubles.
John Chambers,
managing director of sovereign ratings at Standard & Poor's Financial
Services LLC, said China's greatest vulnerability stemming from the euro crisis
lies in the possibility that there will be a sharp decrease in its exports if
the mild recession in Europe and slow growth in US develop into a deep economic
contraction as severe as what happened in 2008 and 2009.
"I
don't see too much exposure to the financial sector," he said.
"Mostly it's a trade issue."
Chambers
said the Chinese government is likely to rely on conventional means of shoring
up the country's economy instead of responding with an aggressive fiscal
stimulus, as it had in the past with the help of local governments.
"China
has large room to maneuver, both on the fiscal side and monetary side," he
said. "But if there is a global depression, no one is going to escape
it."
Toshiro
Mutoh, chairman of Daiwa Institute of Research, said the European debt crisis
has dampened Asian countries' prospects by slowing activity in the financial
markets and hindering trade in the region.
"The
ongoing deleveraging in Europe has led to a backflow of capital from
Asia," Mutoh said. "Asian countries should establish a 'firewall'
against that."
"I
don't think the debt problem in Europe is posing an increasing threat to China
and other Asian countries," said Li Daokui, a former adviser to the
central bank monetary policy committee and a professor at Tsinghua University.
Li said
the situation is actually getting better, especially after the European Central
Bank injected liquidity into the market, officials approved establishing a
firewall consisting of 800 billion euros (US$1.06 trillion) and large countries
such as Italy agreed to make reforms.
"And
China's risk exposure to euro debt is very small and controllable."
Liu
said the eurozone has made progress in responding to the debt troubles,
especially by adopting austerity measures and injecting liquidity into market.
But those steps aren't expected to go far enough to solve the fundamental
problem.
"What's
more, stricter austerity will make some countries less able to repay
debts," Liu said.
Despite
Europe's unclear prospects, China should be more aware in the long term of the
risks that are hidden in the US economy instead of those in Europe, Liu said.
"The
unemployment situation and consumers' confidence in the US haven't improved
yet," he said. "In addition, its huge fiscal deficit will probably
lead to a decline in interest rates and drag down economic activity."
Wang
Xiaotian
China
Daily
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