|
WASHINGTON: A US recession will dampen China’s
surging exports but the impact on the world’s most populous
nation, which is taking steps to cool down a red-hot economy, may be
limited, experts say.
But they also cautioned that
Beijing must be prepared to face protectionist trade policies from
Washington as a result of a recession, with the subprime mortgage
crisis and the credit rout showing little sign of easing.
Many experts believe there is a
greater than a 50-percent likelihood of the United States, a huge
absorber of Chinese exports, plunging into at least a short, shallow
recession over the next 18 months or so.
Fred Hu, managing director of
Goldman Sachs (Asia), said a modest US downturn could not take a
heavy toll on China, which was stepping up efforts to cool inflation
to prevent the world’s fastest growing major economy from
overheating.
“If the US economy really does
enter into recession, there could be an impact on China in a direct
way, but the timing however is not all that bad,” he said on the
sidelines of a Washington conference on China’s economic growth
and its implications for the world.
“If there is a mild recession,
not a protracted, deep recession, that may provide some welcome
cooling agent to the Chinese economy, whose rapid growth is largely
export-driven,” he said.
Daniel Rosen, a China expert at
the Washington-based Peterson Institute for International Economics,
said a US recession could take a toll on industries in China most
dependent on US exports, especially those producing goods for the
American household sector.
But he hastened to add that
China’s ongoing moves to boost domestic consumption in a bid to be
less reliant on exports could be a critical cushion.
“At the same time though, as
China shifts more to domestic consumption itself, then it relies
less on US consumers and more on the Chinese consumer. So I don’t
expect there to be a heavy hit on China from a moderate
recession,” he said.
The World Bank said Tuesday that
US economic growth likely slowed to 2.2 percent in 2007. The bank
forecast a 1.9-percent expansion in 2008, then a rise to 2.3 percent
in 2009.
“External demand for the
products of developing countries could weaken much more sharply and
commodity prices could decline if the faltering US housing market or
further financial turmoil were to push the United States into a
recession,” a bank report warned.
US economic data through the
third quarter of 2007 remained robust, but more recent reports
suggest softer conditions.
With the housing sector slowing
sharply, oil prices hovering near $100 a barrel and the US dollar
slumping, Beijing appears to be bracing also for financial market
turbulence.
“China’s financial system is
thus gradually improving its knowledge to deal with instability or
turbulence of varying degrees,” said Chinese central bank governor
Zhou Xiaochuan in a report circulated at the conference.
“Although it’s difficult to
avoid mistakes completely, the key is to learn the right lessons,
make improvements, and achieve substantial progress,” he said.
As campaigning for the November
US presidential elections heats up amid the weakening economy, Wing
Thye Woo, a China expert with Washington-based Brookings
Institution, warned about the prospect of protectionism that could
take a heavier toll on the Chinese economy.
“With recession, China’s
direct exports to the US will fall but the protectionism will lead
to further decrease in exports and I think then the outcome in China
will be slowdown in economic growth,” he said.
But he still believed the Chinese
could offset any deflationary effects by increasing domestic
infrastructure investments to help lay the groundwork for greater
economic expansion in the future.
--AFP
|
