What should China do if Greek exit euro?

Pan Jiancheng

Deputy director-general of China Economic Monitoring and Analysis Center of the national bureau of statistics

What will be the implications for China if Greece leaves the eurozone?

Given the amount of trade between China and Greece, if (Greece) were to leave the eurozone, that would not be likely to have a big effect on China. What is really worrisome is that if more European countries such as Spain and Italy were to follow suit, then the eurozone would be in big trouble. In that case, the effect on China and the global economy would be huge.

The chances of that happening, though, are small for the time being.

Will China be able to handle the economic fallout without Greece?

I would argue that the economic slowdown in itself doesn't matter much. We should only start to worry if the slowdown leads to a rise in unemployment and a decrease in people's incomes. So far, we haven't seen those two things happen in China. Although the GDP growth rate slowed to 8.1 percent in the first quarter, the fifth decline seen in a row, we still need more time to know if there is a trend. And the government should be very careful in adjusting its existing policies, such as those that pertain to real estate. A large-scale stimulus package, like what we adopted during the 2008-09 period, will not prove beneficial for economic restructuring.

If Europe becomes less important as an import and export market, where else can China look?

It's a question that should be answered by businesses. Some of them have turned their eyes to other emerging markets, while some have tried to better explore the domestic market. It's also a good time for them to become stronger competitors and adjust their plans.

What other policies can China implement to lessen the impact of economic decline in Europe?

Since external conditions remain harsh, I believe we should do more to stimulate domestic consumption to promote growth. China has to reform its economy, making it driven more by consumption instead of relying heavily on exports and investments. The quality, instead of scale, of growth really matters at the moment.

Given the slew of measures the government has taken, such as improving (the country's) social welfare system and reducing taxes, now is also a good time to boost domestic consumption. And I believe domestic consumption's contribution to GDP growth will climb this year.

Chinese consumer confidence in the first quarter of this year rose to its highest level since 2005, amid a lowering of inflationary pressures and a cooling of the property market, according to Nielsen's latest survey.