Economy
European crisis to have limited impact on exports
By Lan Lan (China Daily)
Updated: 2010-06-09 09:25
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BEIJING - The deepening debt crisis in Europe that has sparked fresh fears after reports of a potential debt crisis in Hungary, will only have limited impact on exports from China, especially if the European authorities are able to prevent the contagion, top economists said on Tuesday.
The Hungarian crisis had triggered fresh woes that China's exports to Europe, its largest trade partner, would be affected.
Though a weak European market would certainly impact Chinese exports, most of the affected regions till now are not major trading partners, Boris Cournede, principal economist with the Organization for Economic Co-operation and Development (OECD), said in Beijing on Tuesday.
"If the crisis could be controlled, it will not have much impact on China's exports," he said.
"The fiscal scenario of China's major partners like Germany and France is relatively healthy. Britain and Italy have potential risks but they are relatively under control," said Wang Haifeng, an economist with the Institute for International Economic Research under the National Development and Reform Commission.
Exports will increase this year due to the low base of last year, but the prospects for exports to Europe and overall exports are "not optimistic", Wang said at a forum hosted by the China Development Research Foundation in Beijing.
During 2009, the contribution of China's net exports to the GDP was a negative 3.6 percent and many economists feel it ticked over to the positive terrain at the beginning of this year.
But the Greek debt crisis and its subsequent fallout have raised fresh doubts, said Yu Yongding, an economist from the Chinese Academy of Social Sciences.
He said that the European debt crisis is far from over, while the public debt situation in the United States still needs to be monitored closely.
China's exports to Europe were $236.28 billion last year, about 19.7 percent of the nation's total exports.
"It is important to continue to move towards a more neutral monetary policy stance. This will involve some increase in interest rates and a more flexible monetary policy regime," said Cournede.
He said the low interest rate policy would bring various problems to the economy. "China should adopt a tighter monetary policy by the end of the year and increase interest rates in 2011."
He said while economic growth in the eurozone region would remain weak, it is unlikely that a double dip recession will occur.