Editor's Note: A specter is haunting the world. It originates in Europe and it makes every Chinese businessman shudder. Will the eurozone fall apart if Greece drops out? And what impact would this have on China? These questions have dominated many conferences of economists, business leaders, and international relations experts in Beijing over the past couple of weeks.

Although many of them have said, or rather hope, that the chances of a Greek exit are still small, there is considerable concern that, should it happen, it would cause problems for the Chinese economy, which relies heavily on exports to Europe. Economists say that, in this context, the best protection for China is to press on with economic reform.

Q1

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

Q2

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

Q3

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

Q4

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

Wang Haifeng

Director of international economics at the Institute for International Economic Research, a think tank under the National Development and Reform Commission

A1

The chances of Greece leaving the eurozone, I believe, remain small. And even if it leaves the zone, the economic effect on the European Union and China will be small, since the market digested information about that possibility almost half a year ago and has adjusted itself accordingly.

Meanwhile, the EU has also prepared itself to soften the effects of a Greek exit as much as possible.

The exit, though it will harm Greece and the EU economy in the short term, may not be a bad thing for both in the long run.

Compared with a Greek exit, a decision by Italy and Spain to leave the eurozone would pose real difficulties. Italy's ability to affect the EU economy, to some extent, threatens to be as great as what Lehman Brother's bankruptcy did to the US economy during the 2008-09 period. But the chances of that happening are small.

A2

The debt crisis in the EU has mainly affected China's economy through trade and investment. Most of the effects, though, appeared last year, thus leaving less room for further deterioration.

Since late last year, China's export growth has slowed. Shipments overseas rose a mere 4.9 percent year-on-year in April, compared with 8.9 percent in March, according to the General Administration of Customs.

A3

China's exporters, in fact, have been doing more to explore emerging markets, while the EU and US economies have slowed down. Meanwhile, as Chinese products remain able to compete on price, they should continue to be popular among overseas users even in a sluggish economy.

A4

I would suggest that the government be more tolerant of a reasonable economic slowdown and pay more attention to the quality of (economic) growth.

There's no need for the central government to change its existing domestic policies radically in response to the worsening EU debt crisis as long as the country's rate of GDP growth remains above 7 percent. China should take bold measures to prevent the EU economy from deteriorating.

Lian Ping

Chief economist of the Bank of Communications

A1

There is little chance that Greece will leave the eurozone. If it were ever to happen, China would be vulnerable to such a situation.

China's exports to Europe would decline further in the short term. Other countries such as the United States, Japan and emerging economies would also be affected, causing China's exports to those countries to decline.

A Greek exit from the eurozone would greatly affect China's international payments and capital flow. There would be large-scale capital outflows from China's property and stock markets, because European countries are attracting global capital to return in order to deal with debt risk and because the risk appetite would fall globally. The short-term outflow of capital would depreciate the yuan, leading to domestic monetary tightening and drive up costs in the private sector.

There would certainly be a major impact on Chinese financial institutions located in Europe, which mainly conduct bond business, within two to three quarters.

A2

A Greek exit from the eurozone would definitely increase the slowdown pressure on Chinese economic growth. The Greek economy would suffer greatly. At the same time, a global financial crisis would occur due to severe market turmoil. China would inevitably be involved in such a crisis. A downturn in China's foreign trade and capital outflows would lead to a decline in private sector investment. Furthermore, the loss of capital and yuan depreciation as well as reduced market confidence would bring about economic decline in China.

A3

It's difficult for China to find another import and export market as large as Europe in the short term. Europe is now overtaking the United States as China's biggest foreign trade market. Although trade volumes between China and the emerging economies such as Russia, India and South America are surging, their markets remain relatively small.

A4

To mitigate the impact of economic decline in Europe, China should diversify its export channels, in order to stabilize export volume and expand domestic demand to reduce its reliance on exports and investment.

Policies supporting small and medium-sized enterprises should be launched as soon as possible, because they are the major drivers of domestic demand and job creation. China should boost support for science and technology including encouraging companies to carry out technological upgrading and innovation. Financial policy reform and currency policy reform should be further deepened. The social security system needs to be improved to prevent jobless people from falling into poverty.

Most importantly, an emergency plan to cope with a severe crisis must be drawn up to reduce the risks brought about by unexpected changes in the global economic situation.