By VIKAS BAJAJ
and KEITH BRADSHER


MUMBAI, India - While rising government debt is a growing concern in Europe and the United States, Asia’s economies remain remarkably resilient, even buoyant, underscoring how economic might is shifting from West to East.

China has been repaying some of what little foreign debt it owes, even as economists wonder whether Greece will require an international bailout and ask how long the United States can sustain record budget deficits. “We took a pass on the economic crisis,” said Philip S. Carmichael, president of Asian operations at Haier, China’s biggest appliance maker.

Even the Asian economies that have shrunk during the recession, like Malaysia and Cambodia, escaped the worst ravages - with the notable exception of Japan, Asia’s first industrialized country. Because of the Asian financial crisis of 1997, many Asian countries have been more conservative about borrowing and spending over the last decade than Western nations, which went on a debt binge during the good times and continued to increase their borrowing during the recession to try to turn around their economies.

Many economists say countries have to spend during recessions, increasing deficits and debts. But investors and economists alike worry about the long-term effect of mammoth debt on the vitality of Europe and the United States. The longer it takes Western capitals to confront their overspending, the higher and more rapid Asia’s rise will be, many economists say.

Even though Asian stock markets have fallen this month, analysts say there is no obvious Asian equivalent to, say, Greece. Investors see little risk of default among even heavily indebted countries like India and Japan.

In India, the government’s debt is nearly 80 percent of the gross domestic product, but it owes more than 90 percent of that money to its own citizens. Of the rest, a big chunk is held by agencies like the World Bank, which, are not likely to press for quick repayment.

Compared to Greece, “the threat of these two defaulting is nowhere close, and the reason is that, thanks to high domestic savings rates, their debt is almost all domestically financed,” said Kim Eng Tan, a sovereign debt analyst in the Singapore office of Standard and Poor’s.

“If you sell bonds to your own citizens, and you do it in your own currency, you don’t have much of a problem,” said Ajay Kapur, the chief global strategist for Mirae Asset, a big South Korean financial services company.

China has been repaying some of its small external debt as it comes due, a luxury that a country with more than $2 trillion in foreign reserves can afford.

China showed a government budget surplus for the first 11 months of last year, but Western economists still expect a small deficit for the entire year because agencies tend to go on spending binges every December to avoid returning unspent money.

A few smaller Asian nations have had difficulties in the last year and a half. But they have been hurt more often by political strains than by economic troubles. The Asian country hurt the most by the global financial crisis was arguably Mongolia, where a steep but temporary decline in world copper prices prompted the government to obtain a $224 million I.M.F. loan in March.

Though the risk of a full-blown sovereign debt crisis in Asia may seem remote, economists say there are other reasons that investors and policy makers should be concerned about high deficits. I

n India, the growing fiscal deficit - which reached 8 percent of G.D.P. last year, up from 3.3 percent in 2008 - could damp growth by making it harder and more expensive for corporations and individuals to borrow money, said Ila Patniak, a senior fellow at the National Institute of Public Finance and Policy in New Delhi.

China, like India, has internal conflicts - between rural and urban populations and between Beijing and the disparate governments in the provinces - that make fiscal policy more difficult.

But the debt problems faced by Asian nations are neither as immediate nor as far-reaching as the growing debt in Europe and the United States.



As some European nations stagger, China is repaying what little
foreign debt it owes. A worker in Shanghai. / REUTERS