Japan Earthquake Has Limited Impact On China'S Economy

It is reported that more than 8 intensity occurred in Japan yesterday.

Reporter: on Friday, a strong earthquake of magnitude 8 or more occurred in Japan.

Ye Tan: I think the Japanese economy will have a very big impact. We know that from the beginning of last year, the Japanese economy is in the process of slow recovery. Japan has continuously flooded its currency, making the global liquidity more abundant. If there is no earthquake, the yen will be able to replace the US dollar as the main interest rate currency in the world.

But after such an earthquake, we will find two situations. First, Japanese asset prices began to decline, and second yen began to return, and the liquidity it released to the world was no longer so large. Then it began to flow back to China to start infrastructure construction and start post disaster reconstruction, which led to a possible reduction in global capital.

In 2010, we anticipate that the yen may win over the US dollar as a carry interest currency. Because of the expected change in the Japanese earthquake, the US dollar is still the main interest rate currency.

Reporter: as a close neighbor to Japan, we have a lot of contacts with Japan in geopolitics and economy. How will Japan's earthquake affect China's economy?

Ye Tan: I think the earthquake in Japan will have an impact on China's economy, but the impact will not be too great.

First, China does not have a very open product market and then lets the Japanese yen come in, so the yen will not have much impact on China.

Second, although Japan has a relatively high trade volume with China, China's main trade outlet is Europe and the United States. As long as the two export markets maintain market equilibrium, the impact on China will not be too great.

The situation in Japan will have some psychological effects on China, for example, China's stock market will also fall, and the price of its products may fall, but it is still not very long.