The terrorist attacks on the United States last month will cause economic hardship across North America, but experts discussing the outlook for east Asia's major economies at the Brookings Institution-Keizai Koho Center Regional Forum were divided on the knock-on impact here.

Kyung-Won Kim, president of the Seoul Forum and former ambassador to the United States, was the most pessimistic on the prospects for his country's economic well-being.

"The South Korean economy was doing quite well before Sept. 11," he said, pointing out how it had recovered after the Asian crisis of 1997-'98. But growth has since fallen considerably and there are fears that it could be as low as zero percent in the third quarter.

"But until Sept. 11, most people were expecting a better performance next year upon the back of the U.S. recovery, maybe as much as 4 percent or 5 percent" he said. "But that has all changed now."

External factors are not the only pressures on Seoul, he said, pointing out that three factors were already weighing heavily on the economy; the global economy; relations with North Korea, with optimistic views predicting reconciliation and investment, but pessimists warning of Pyongyang refusing to open up and a deterioration in relations; and the December presidential election.

"Elections have less of an impact on the economy than they used to," Kim said, "But an antibusiness candidate will scare away foreign and domestic investors, while a probusiness candidate will calm investors' nerves."

"Public perceptions of a candidate is as big a factor for Korea as terrorist strikes in the U.S.," he said. In contrast to Kim, C.H. Kwan, senior fellow with the Research Institute for Economics, Trade and Industry, was positively upbeat on China's prospects, both short term and long term.

"Until one year ago, most people underestimated China's economic power," he said. "But China will soon overtake Japan as Asia's No. 1 economy and it will become a major force in shaping Asia as other countries face a slowdown."

He urged other Asian nations -- particularly Japan -- to consider China as a partner rather than a threat to their own economies as regional trade structures could be harmonized to take advantage of each nation's strengths.

The rise of China has been hand in hand with the "hollowing out" of Japan's industries, he said, which has caused bilateral friction that has been exacerbated by the imposition of import curbs.

Kwan pointed out that the biggest threat is to Japan's "sunset" industries as China's overwhelming strength in labor-intensive products dwarfs that of Japan, but he emphasized that by repositioning itself to focus primarily on technological products, Japan could even benefit from China's strengths.

"There should be no resorting to protectionism as declining industries are unlikely to recover," Kwan said. "Instead, we should seek a division of labor and the ultimate goal should be convergence and horizontal division between nations."

Nicholas Lardy, a senior Brookings Institution fellow, agreed that events in the U.S. and retaliatory strikes against Afghanistan are unlikely to have a serious impact on Beijing's economic growth.

"China's economic growth is not likely to be hugely affected . . . because domestic aggregate demand is strong and has been double-digit in most years," he said.

"Fixed investment demand is very strong and foreign-funded enterprises are a big influence and that is likely to continue," he added. "Exports will suffer, but not dramatically." Lardy predicted that China's accession to the World Trade Organization will lead to the rewriting of several countries' trade laws and could result in a dramatic expansion in exports, particularly clothing.

According to Lardy, China could produce as much as 50 percent of all the clothing in the world in the near future.

"In two to three years, China will be the fourth-largest exporting country in the world," he said. "In a decade, it will be second only to the U.S."

Returning to Japan's situation, Keikichi Honda, chairman of Sun Microsystems KK, stated that, "In the short term, we face a situation in which the terrorist attacks will cause a slowdown in the information technology sector, but I am much more positive on the longer term.

"There is underlying optimism on the position of Asian economies," he added, but agreed 2000 had been "a problem year" for the industry.

One sector in which Japan leads the world is broad-band technology and third-generation mobile phones, Honda said, adding that by tapping into this with other Asian states, Japan could become the focus of the world.

Ending the session on an upbeat note, Kim suggested that in times of economic crisis, Korea's neighbors might like to follow the example of their workers: "Koreans tend to drink and sing their way through the hard times, while the Japanese seem to just tighten their belts."