TAIPEI — The European debt crisis cannot be sorted out in a short time and the problem could impact mainland China and then affect Taiwan, an economic scholar at Academia Sinica, the nation’s highest research institute, said yesterday. Kuan Chung-ming said the solution to the European debt crisis will not come quickly as every country has its own interests and political problems to consider.
“I’m more concerned that European debts could impact the economic development of mainland China, as Europe is the biggest exporting market for China, even bigger than the United States,” he said. Kuan observed that mainland China’s economy is not in good shape, especially because of its funding problem.
He said that if mainland China’s growth drops to 6 percent, then “Taiwan will not be able to sustain such a situation.” For this reason, he thinks that if European debts affect China’s exports, then the ripple effect on Taiwan’s economy will be worth monitoring. On the prospect of Taiwan’s economic growth next year, Kuan said that all sorts of economic figures have been poor, and he predicted that “it will be difficult to maintain an economic growth of 4 percent next year.”
The reality Taiwan has to face is that its economic growth will “depend on how good the world economy is, and not just on looking within,” he said. He noted that currently the domestic demand market is still good, but if the market cools down, the situation will get worse. He said that for an overall good economic situation, it is not enough to depend on domestic market, as it is small and will need export growth for a boost.