Will the sub-prime mortgage crisis damage China's economy? This week, domestic bankers, economists, and governmental think-tanks unanimously told us that no, it will not.

With reservations, we agree. Although the central banks continue to inject cash into the economy, financial markets abroad are jittery, and general fears over market health, though soothed, still persist, China has suffered little from the crisis.

The reason we heard most for this is that China is still a closed market with closed capital accounts. And although some Chinese banks had purchased sub-prime mortgage loan bonds, they avoided suffering greatly for it.

In this new era of global financial integration, will China really escape this crisis unscathed? Even if everything has gone smoothly, can China gaurantee that it won't be taken down by such a phenomenon in the future? And if that day came, what measures should China take?

We are not as enthusiastic as some are. China's financial system is a far cry from those of Europe and America. It's as fragile as it is young, and its ability to manage risk is and unproven. Moreover, with the backdrop of economic globalization, there can never be total insulation between China and the world. So how can China be so optimistic?

During the 1998 Asian financial crisis, China was able to avoid a market slump, widespread bankruptcies, and a currency crash. But it failed to keep economic growth at 8 percent and plunged into prolonged deflation. This is testimony to the crisis' destruction. Since then, China has become even more intimately linked to the world. If a global economic winter comes, how can China stay in the sunshine?

Conservatively speaking, even if the Chinese markets are not affected by the American sub-prime crisis, does the potential exist for a similar one independently emerging in China? The central bank has repeatedly warned of risk in the mortgage market. If the housing market sours and prices dive, will Chinese banks also be ambushed by bad debt?

In the wake of the disclosure that the Central Huijin Investment Company injected cash into Everbright Bank, China has begun its second round of state-owned bank reform. After their restructuring, several state-owned banks, including China Construction Bank, the Bank of China, and the Industrial and Commercial Bank of China, listed overseas. If those same financial markets fall into prolonged recessions, those banks' road to reform may not be traversible for the Agricultural Bank of China.

Thus China cannot fall into complacency even if the road ahead seems safe and sound. It should draw a lesson from recent experiences and examine the weak spots in its own financial system in order to identify and prevent future pitfalls.