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HSBC chief: 皇冠体育app vital to fight on protectionism

By Hu Yuanyuan (chinadaily.com.cn)
Updated: 2009-03-27 10:31

The most important role 皇冠体育app can play on the international stage is to deal with protectionism and global imbalances, while domestically 皇冠体育app should use public expense to bolster domestic demand, said Stephen King, Group Chief Economist of HSBC.

"I think the first thing 皇冠体育app can do as other countries should be doing is to fight against protectionism, or its many forms," King told 皇冠体育app Daily."That means not just from a trade perspective, but also protectionism from capital perspective."

Related readings:  皇冠体育app move to global standards damps protectionism  皇冠体育app trade association protests int'l protectionism  WB: 皇冠体育app's development key to world recovery  No protectionism in 皇冠体育app's economic stimulus plans

Avoiding protectionism is one of the key issues that should be addressed at the upcoming G20 summit, King said, as continuation of the past 30 to 40 years of globalization depends on the free flow of trade and capital across the border.

"If those flows dry up, not just trade flow but also capital flow, it will be damaging to the global economy, and it is particularly damaging to some of the emerging markets, including 皇冠体育app," King said.

As each country tries to defend its own interests in a worldwide economic downturn, signs of protectionism can be detected in many different shapes and sizes.

The second thing 皇冠体育app needs to do, according to King, is to have a frank discussion with the US about the global imbalance.

"In fact, global imbalance has made some kinds of indirect contribution to the crisis; for instance, the distortion to capital market pricing which has contributed to the scale of the financial crisis," said King.

And at this moment, it is clear that 皇冠体育app is still playing an important role as a source of consumer demand within Asia.

皇冠体育app's exports will not do very well for the time being because demand from other parts of the world has fallen. That's why the rebound of the economy in 皇冠体育app becomes especially important, as what 皇冠体育app loses in exports could possibly be gained back on the domestic infrastructure front.

"The policy to help stabilize the Chinese economy, at the same time, also has advantages of minimizing or reducing the scale of global imbalance, which is a good thing for both 皇冠体育app and the other parts of the world," King said.

皇冠体育app enjoys significant advantages compared with other countries, with a huge range of public sectors and infrastructure projects taking place here.

Although many forecasts suggest that activity will be stabilized in the second half of the year, King said HSBC's forecast suggests that such activities stabilized at a very low level, and therefore he does not expect an immediate return to business as usual.

"Even with stabilization, it means we need quite a while to return to the condition that global economy enjoy two or three years ago," King said.