26 Aug 2015

Pacific region buffered from falling Chinese markets

2:23 pm on 26 August 2015
Investors look at screens showing stock market movements at a securities company in Beijing.

Investors look at screens showing stock market movements at a securities company in Beijing. Photo: AFP

An economist specialising in Pacific island countries says the region is reasonably buffered from falling markets in China.

Emma Veve of the Asian Development Bank says commodity exporters like Papua New Guinea will feel the effects of lower prices for their products and preparations must be made for this.

Ms Veve says there will be a slow down in the number of outbound tourists from China but the market is so huge countries dependent on the China trade like Fiji and Palau will barely feel the shock.

She says the devaluation of the yuan eases the way for countries heavily reliant on imported fuel and concessionary Chinese loans.

"The benefit for the countries will be with the devaluation of the exchange rate. These loans will be more affordable for the Pacific countries. If the economic adjustments continue in China, China might think about whether to progress with more loans to the Pacific but the Pacific is very small compared to the Chinese economy. It wouldn't be a priority for government."

Emma Veve says China is unlikely to risk goodwill for minimum gain by backing off pledges to the region like tarriff fee access for goods.