BOAO, Hainan, April 8 (Xinhua) -- A fresh debt crisis may break out in the short or medium term, economic experts have warned at the Boao Forum for Asia, which opened on Sunday in south China's Hainan Province.
The world's major economies are faced with grim economic prospects, with looming uncertainties for the Eurozone and rising levels of debt risks in the United States and Japan, said forum delegates, adding that further crisis may also haunt emerging economies including China.
CRISIS SPREADS
They discussed how the prolonged Eurozone crisis -- accented by the recent sovereign debt and banking crunch in Cyprus, where large bank depositors were forced to take a sizeable loss to recapitalize the country's banking system -- showed the bloc of countries are still at an economic impasse.
Gary Parr, deputy chairman of global investment bank Lazard Ltd., said many European countries are now suffering financial crises, and these problems are spreading from one country to another.
The zone's banking system is still crippled by inadequate capital, and the European Central Bank is not a powerful regulator, according to the investment banking veteran, who stressed that unified regulation is needed for repairing market confidence.
Tom Byrne, director of analysis for Moody's Sovereign Risk Group in the Asia and Middle East regions, agreed that more work needs to be done in the Eurozone to eliminate systemic obstacles.
The entire bloc should act like Germany, ushering in structural reforms to revive growth and restore market faith, Byrne said.
Furthermore, the Eurozone crisis is only one link of a more extensive debt crisis, noted Zhang Qizuo, an economist working on the strategic development of the G20 and emerging economies.
Both Europe and Asia are linked by the same chain, Zhang said, adding that the crisis in the Eurozone will have an impact on China's real economy, stock market as well as the real estate sector.
Echoing Zhang's remarks, Byrne also said that the Eurozone crisis may be transmitted to the rest of the world.
Euro assets, held by governments outside the zone and commercial banks around the world, would shrink, and major financial markets would have to take the strain for embattled Eurozone banks as they cut their overseas businesses, the Moody's analyst explained.
A foreseeable fiscal austerity in Eurozone member states may send them into long-term recessions, affecting other countries' exports to Europe and stagnating economic recoveries, Byrne added.
Life aboard a fishing boat under bridge in city of Chongqing
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