How a war in Iraq will affect Asia

China and Hong Kong are relatively well placed to weather the storm.

Even a swift, successful war in Iraq will have negative consequences for Asia, although China and Hong Kong have a better capacity to absorb a shock, according to analysts speaking at a panel sponsored by the Asia Society in Hong Kong.

A war will lead to some degree of economic slowdown in the West, which will hurt foreign direct investment in China. But companies everywhere, although investing less overall, will also look to cut costs and shift production to China, says Don Hanna, head of economic and market analysis at CitigroupSalomon Smith Barney. So while FDI reductions are expected, they will be less than global falls in investment. Moreover China's internal consumer...

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