Op-Ed Contributors

Financial Japan still stable

By Xiao Gang (China Daily)
Updated: 2011-04-06 08:03

Disasters in the country caused temporary turbulence but won't shake its monetary system and economic resilience

Japan's tragic earthquake triggered a devastating tsunami and radiation leak, causing severe damage to the country and its people. The triple disaster also sent global share prices tumbling. Japanese banks were among the hardest hit stocks.

Naturally, investors are deeply worried how big and how long the negative impact on the banking industry will be. From my observation, the Japanese disasters are unlikely to bring about a new financial tremor.

Japan is the third largest center of foreign exchange trading in the world, with an average daily trading volume of $312 billion. Many US and European banks operating in Japan evacuated their employees and shifted the trading business to Hong Kong or Singapore after the quake and the tsunami.

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In a sharp contrast to the Western banks, Bank of China's Tokyo branch, at the request of the local financial regulator, did not stop its business in Japan in the face of aftershocks and the fear of nuclear radiation. Because banking business volumes have seen a significant and sudden increase during the emergency period, our staff, including local residents and expatriate employees from China, had to work longer hours, often spending hours in traffic every day to get to the office. Over weekends they have been visiting corporate customers, in order to continue providing them with financial services.

The behavior of our bank's staff members not only demonstrated a good work ethic and team spirit, but also showed their strong faith in the Japanese economy and the financial system.

It seems that this temporary blow to the Japanese economy, despite varying estimates of the eventual loss to GDP, will not change the fundamentals of economic growth. The Japanese economy grew by 3.9 percent last year, its best performance in two decades. The need to rebuild the devastated areas will create a huge potential for further development, even attracting funds from outside Japan, including private equity, foreign bank loans and sovereign wealth funds, into the country.