World leaders are being warned to keep a close watch over the threat of possible financial turbulence caused by the global economic slowdown and the current turmoil in the worlds financial markets.
The suggestion was put forward in a package of ideas about the world economy that will be submitted to the top leaders of the 21-member Asia Pacific Economic Cooperation (APEC) forum by the APEC Business Advisory Council (ABAC), an organization established in 1995 that represents the private sector of APEC members.
The leaders will discuss five priorities in the world economy at ABAC's fourth meeting of 2001, which is to be held in Shanghai from October 18 to 21.
Qin Xiao, chairman of ABAC, said his agency's suggestion was based on the slowdown of the economy in the United States and Europe and the current turmoil in the major stock and foreign markets.
"If you look closely at the world financial markets, you can sense the pressure of the coming threat of financial turbulence," Qin said.
"The turbulence will encroach on the faith of investors and this is why I think the risk is there," Qin told more than 50 journalists at yesterday's press conference aimed at making known the solid preparations that have been made for ABAC's coming meeting.
Lin Xiaodong, a senior researcher with the China International Trust and Investment Corporation, shared Qin's concern.
"It is the experience of world economic history that turmoil in financial markets is a sign that the economy is heading towards recession," Lin said.
"This will affect investors' confidence, which is closely related to the occurrence of financial contagion," said Lin.
However, E Zhihuan, a senior financial expert with the Bank of China, said there are no signs that financial turmoil will happen in the world in the near future.
"As globalization speeds up, the situation of the global economy is becoming complicated; but I cannot see any sign that the world's financial system is in disorder," E said.
According to E's recent research, the development of investment markets among the emerging countries has been back on the normal track since this May.
Meanwhile, though the United States and Europe are in a recession, the confidence of investors hasn't been influenced too much so far.
"As far as I know, the massive bankruptcy of enterprises is another portent of financial turbulence, but I don't see this happening in the world at present," E said.
(China Daily 09/25/2001)
