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Asia to lead global economy out of crisis

By Zhou Xiaoyuan (People's Daily Overseas Edition)

16:26, August 29, 2011

Edited and Translated by People's Daily Online

Although the world economy has been dragged down by the European and U.S. debt crises, China's exports reached a record 175.1 billion U.S. dollars in July, with an increase of 20 percent from a year earlier, after dropping four consecutive months. The exports of India and some other countries have also increased significantly, and even Japan is showing signs of recovery.

The substantial increases in the exports of certain countries despite the global trend showed that global economic demand was higher in July than in June, which was encouraging news for investors worldwide.

Asia maintains great momentum for economic growth

Due to the ongoing European and U.S. debt crises, there have been growing worries among investors that the United States and developed European economies may suffer a double-dip recession, which has caused major turmoil in the global financial markets. The stock markets in the United States, Europe and Asia have suffered severe declines over the past two weeks. The economies in some Asian countries and regions are increasingly affected by the debt crisis, sparking greater panic among investors.

"Economic globalization and the U.S. and European debt crises have also made it impossible for Asian countries not to get embroiled," Sun Fei, a famous financial investor and economist, said.

The U.S. and European debt crises, economic slowdowns in developed economies and a new round of quantitative easing policy will in many ways pose challenges to emerging economies, such as the inflows of "hot money" and the sharp appreciations of their own currencies. Furthermore, if the stock market continues to plunge, the U.S. administration will likely adopt the third round of quantitative easing policy or continuously keep interest rates super-low, putting more pressure on emerging economies.

According to the data from the International Monetary Fund, the GDP of developed countries was up by 3 percent on average in 2010, and that of emerging markets and developing countries was up more than 7 percent during the same period. Although this year's average GDP growth of emerging markets and developing countries is expected to drop, it will be up to 7 percent.

Mei Xinyu, a senior researcher from the Research Institute under the Ministry of Commerce, said that as some emerging countries in Asia have contributed to a majority of the world’s GDP growth over recent years, Asian countries' real economies have showed a sustainable development momentum amid the debt crises.

Real economy forms safe haven

Mei believes that the U.S. and European debts will affect Asia's emerging countries mainly through two channels: the trade and capital flows. The impact on the financial market has spoken for itself. Regarding the trade, North America and Europe are the largest export markets of Asia’s emerging countries, and therefore, if the U.S. and European debt crises make the real economies of North America and Europe decline severely, the decreasing demands from them will affect the exports of Asian countries. In addition, the investments from countries of North America and Europe will also decrease, and that will affect Asia's industries in which a lot of foreign capitals have flowed, such as the manufacturing and real estate industry.

In fact, the impact caused by current crisis on Asia's emerging-market countries was not too severe. That’s because countries and regions of Asia have widely improved their economic structures and debt constitutes after the financial crisis in 1998. The economic strengths and risk-resistance abilities in these countries have improved a lot.

"It could be seen that Asian countries' real economies have a good performance and were quite stable during this crisis, and their debts are far less than those of the Untied States and Europe in the past years," said Mei.

However, Sun said that the strong domestic demand in Asian countries is also a fundamental force driving the emerging markets to develop. Sun believes that Asia will not only have a larger discourse right in the financial area but also develop more rapidly in their real economy after this crisis.

Asian economy still global economic engine

Mei said that Asia makes the most contribution to the growth of global economy.

Haruhiko Kuroda, President of the Asian Development Bank (ADB) said recently that the turbulence on the global financial market triggered by the European debt crisis and the U.S. debt downgrade has not undermined Asia's growth prospects, and Asia is still the global economic engine.

Data shows that the trend of capital return in emerging markets is very obvious, and some large banks and financial institutions have shifted their business focus to Asia. HSBC, Citibank, Standard Chartered and other investment banks said that they would increase investments in Asian economies in the second half of this year.

Due to the global financial turmoil caused by the U.S. and European debt crisis, plenty of hot money flows into Asian emerging countries, which has become a Sword of Damocles hanging over these nations.

To this, Mei suggested that on the one hand, Asian emerging countries should take this opportunity, when the U.S. and European countries are busy boosting their own economies amid the debt crisis, to maintain the stable development of their economy. On the other hand, they should also actively develop new markets and expand domestic demand in order to reduce their economic dependence on the U.S. and European economies. Referring to the buildup of internal capital mechanisms, Asian countries should remain vigilant and adopt proper intervention measures to maintain the stability of domestic financial markets and strive for more benefits while improving domestic financial markets and monetary policies.

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  1. Name

Mike Johnson at 2011-08-3024.108.93.*
Fantastic results! Up 20% to 175 Billion in ONE month!
PD User at 2011-08-3080.94.16.*
2011-08-29.Global economy crisis to be western politician.For govern the state"s to go new generation to be called oneself politician and economist"s complete dence"s in spite of pretty"s university"s certificates.Base crisis.Famous university"s educated ignoramus.Their system economical educate to be bad.Power to support on buddy"s.Little global"s examples with UE-directors union bank"s to be driver taxi name Bielecki next name Marcinkiewicz which"s his professor to tell-economical thickhead for peace of university"s to give diploma.To be driver to rules union finance"s.Happy Europe.
  

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