Chinese Minister of Finance Lou Jiwei (樓繼偉) yesterday voiced concerns about Britain’s vote to leave the EU, with the policymaker saying it has heightened market uncertainty, although some analysts expect a limited impact on the Chinese economy.
The “Brexit” decision “will cast a shadow over the global economy... The repercussions and fallout will emerge in the next five to 10 years,” Lou said at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing.
“It’s difficult to predict now,” he said. “The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view.”
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Stock markets around the world plunged in the wake of the referendum while the pound also plummeted.
Lou’s views were separately echoed by other economists at the World Economic Forum (WEF) in China’s northern city of Tianjin.
“It’s hard to talk about and judge the direct impact on China’s economy,” said Huang Yiping (黃益平), a professor at Peking University and a member of the central bank’s monetary policy committee.
“If [Brexit] is an important landmark in terms of a reversal of globalization, I think that’s very bad for the world, it’s very bad for China,” Huang said.
Tsinghua University professor Li Daokui (李稻葵) was more optimistic on the referendum’s effects on the world’s second-largest economy.
“China is perhaps one of the least impacted economies in the world by the event of Brexit,” he told an audience at the WEF. “The only short-term impact I can think about is the exchange rate of the renminbi [yuan]... But I do think within a few trading sessions that situation will very quickly subdued.”
Also speaking at the forum was economist Nouriel Roubini, famed for predicting the global financial crisis, who said the decision to leave the EU “creates a whole bunch of financial, economic, political and geopolitical uncertainties.”
It could be the “beginning of the disintegration” of the bloc of countries, the euro zone or the UK, Roubini said.
“I don’t expect a global recession or another global financial crisis,” he added. “I think the impact of Brexit is significant but not of the same size and magnitude of the one we had 2007 to 2009.”
JP Morgan global investment management Asia Pacific CEO Michael Falcon said he expects more market volatility but does not think the vote would derail a global recovery.
“It is a shock, not a crisis and so far markets seem to be handling this pretty well,” Falcon said at the WEF.
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