World Bank Group President Robert Zoellick recently said in Beijing that the world economy is entering a “new danger zone.” Coincidentally, the International Monetary Fund and Bank for International Settlements have also issued similar warnings and said that there will be a new round of global economic crises if certain problems are not handled properly.

Compared to the global financial crisis three years ago, what is so special about this new danger zone? What measures should be taken to prevent the new dangers from escalating into a global economic crisis?

The new dangers are particularly manifested in the debt and credibility crisis plaguing the United States and European countries. The domino effect of a sovereign debt crisis is rapidly expanding across the euro zone. A lengthy debt ceiling debate, which almost led to the first-ever debt default by the U.S. government, resulted in the first-ever downgrade of the U.S. credit rating. During the past summer, the European and U.S. debt crises jointly plunged the relatively calm global financial markets into turmoil, and delivered one blow after another to investor confidence worldwide.

Actually, it is the extension of the financial crisis. While coping with the financial crisis, the United States and developed countries of Europe drew on huge amounts of capital to save the beleaguered banking industry and launched abnormal financial stimulus measures to promote their economic recoveries. Then, because the risks were shifted from the private sector to public sector, the debts of the governments became very heavy and the credit of the governments was ultimately damaged.

Observing it deeply, it could be found that the new risk means that policy coordination among different countries is even harder now than it was during the financial crisis. Limited by the debt crisis, the United States and European countries are unable to use new financial expansion measures to stimulate their economies, and therefore they must rely much more on monetary policies, leading to the negative spillover effect.

This is especially true of the United States, which has repeatedly adopted the abnormal quantitative easing monetary policy tool. As a result, the U.S. economy has not only failed to improve, but also a great amount of hot money has flowed into the market of bulk commodities and emerging economies, making emerging economies suffer severe inflation pressure caused by the currency flood released by the U.S. Federal Reserve.

Historical experience has shown that if each country cares only about its own interests in the face of a crisis, it will eventually be hurt by the crisis. To build up confidence and keep current crises from developing into new crises, each country should first handle its own affairs well. In particular, developed countries should adopt practical measures to improve their fiscal conditions and address the tough issue of excessive consumption. Each country should also strengthen the policy coordination with other countries during the process in order to maximize the effects of their own policies and prevent spillover effects.

Meanwhile, each country should also give up their stereotypes and further open up its market in order to get through the difficulties by advancing trade and economic ties with other countries. Given the gloomy economic outlook and weak domestic consumption, European countries and the United States have hoped to promote economic growth through expanding exports and have had higher expectations than ever before that foreign investments can increase job opportunities.

However, they have long refused to lift the restrictions on high-tech exports to China and imposed obstacles to the investments from Chinese enterprises, which have seriously affected the development of the great potential of economic and trade cooperation between the two sides.

The world economy is currently in a complicated, sensitive and tough period. A series of major international conferences in the following several months, such as the G20 summit and the 14th meeting of Chinese and European Union leaders, will provide each country with valuable platforms to strengthen policy coordination. The entire world is in the same boat amid the new crises, and people are expecting various countries to work together to overcome difficulties.

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