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After the Financial Tsunami

Antony Leung is senior managing director of the Blackstone Group and chairman of Blackstone Greater China.
by Stephanie Valera
23 April 2009

NEW YORK, April 23, 2009 – The global economic recession has
unmistakably troubled the robust Chinese economy. Import and export
levels have decreased and industrial output is growing at a sluggish
pace compared to when external factors were favorable. But China's
economy will remain resilient in the face of the global financial
tsunami, according to Antony Leung, Senior Managing Director of the Blackstone Group and Chairman of Blackstone Greater China.

Speaking at Asia Society headquarters, Leung explained that the
Chinese economy's ability to weather the financial downturn is
attributable to timely changes in the government's macroeconomic
policies. For instance, by the third quarter of 2008, China had already
implemented a stimulus fiscal plan and expansionary monetary policies.
Additionally, Leung continued, innovative policies "such as issuing
home appliances vouchers to rural residents, reducing taxes on new
vehicles, providing subsidies to farm machinery purchases, and issuing
vouchers to encourage tourism" have boosted domestic private
consumption. He also noted that this "shift in focus from expanding
supply to stimulating demand is a major policy change" that will
further fuel the economy. Furthermore, Chinese culture encourages
personal savings—and high personal savings coupled with low national
debt provide a healthy environment for further economic development.

Leung predicted that the world's third largest economy may be on its
way to securing second-place status in the near future, given that
China's socio-political stability is the least problematic of the
world's major economies. "Racial, cultural, educational, and political
constituencies" remain intact, and "the Chinese government has
accumulated more experience in managing the nation as well as the
market economy," he added. Long-term growth in China will be driven by
a combination of factors, most specifically "full-scale
industrialization, higher urbanization, development of the financial
sector," and lastly, "reform of the healthcare system." Stephen A. Schwarzman,
Chairman and CEO of the Blackstone Group, noted that as the world
"works through the global financial crisis, it is clear that," China
remains "among the strongest places in the world for financial

As for Hong Kong, Leung argued that in the past it contributed to
China's success in the global economic landscape by virtue of being
China's only international financial center. More recently, however,
"with the Chinese economy gaining importance and influence
internationally, and the determination of the central government in
China to ensure Hong Kong's success under the ‘One Country, Two
Systems' policy, Hong Kong has received many tangible benefits to help
increase its economic development," Leung said.

Leung emphasized the need for enhancing the value-added industries
in each of these two economies to remove any trace of competitive
hostility and to ensure a mutually beneficial partnership that will
bring "rapid growth and lasting prosperity."

Reported by Chandani Punia