European debt crisis and the consequent sovereign credit risk of developed economies and a new round of global financial market turmoil have limited direct impact on China, but indirect effects can not be ignored.
Overall, China's holdings of Greek government bonds and the Greek financial institution's assets are limited, which means that even if Greece defaults on its debt, the direct impact on China is limited. But if the Greek debt crisis can not be effectively checked, and then spread to Portugal and Spain and other euro zone countries, then China will face bigger risks.
The EU is currently China's largest export market, once the fragile EU economic recovery was again drawn into the plight of this debt crisis, China's export situation will become even more complicated.
According to Chinese statistics, in 2009 bilateral trade volume between Europe and China reached 364.1 billion U.S. dollars, accounting for 16.5% of China's total global trade. China's exports to Europe reached 236.28 billion U.S. dollars, accounting for 19.7% of China's total exports. Affected by the economic crisis last year, China's exports to Europe plummeted by 19.4%, and this year because of the Greek debt crisis, the prospects of China's exports to Europe becomes uncertain.
Affected by the debt crisis, the euro fell against the dollar to 14-month low. The recent sharp rise in the renminbi exchange rate against the euro makes the situation of China's exports to Europe more and more severe.
In addition, some analysts have pointed out that the European economic outlook is not promising, a large number of hot money may turn to flow into emerging markets like China, and this will aggravate the pressure of RMB appreciation and the risk of economic overheating in China.