in the chinese market. >> however, our chinese expert does not share klausner's confidence. >> if a financial crisis should arise, and it spreads to european countries that play a key role indi the diamond tradet will affect china. then i think that the people here will think twice before spending large sums on diamond. >> reporter: so diamond processors could be taking more chances than they were prepared for. if the growth of the china economy takes a turn for the worse, the outlook for the processors won't be nearly so dazzling. standing by in our beijing studio. is beijing the only chinese city in which the diamond trade is expanding? >> actually know, in coastal areas, in the southern part, close to hong kong, the industry is taking off. government regulators have made this possible by giving foreign diamond processors a lot of encouragement. this becomes clear when you kid what the processors must put up with in india, an industry leader. foreign operators must cut through a lot of red tape to set up businesses there. but in china, policymakers go a long way to encourage forei

but klausner is not worried. >> next five to ten years, i think we can see steady and good growth in the chinese market. >> reporter: however, a chinese expert does not share klausner's confidence. >> translator: if a financial crisis should arise and it spreads to european countries that play a key role in the diamond trade, it will affect china. then i think that the people here will think twice before spending large sums on diamonds. >> reporter: so diamond processors could be taking more chances than they were prepared for. if the growth of china's economy takes a turn for the worst, the outlook for the purchasers won't be nearly so dazzling. >> after filing that report, michitaka joined us from our beijing studio. we asked him where else besides beijing the diamond trade is expanding. >> in coastal areas, especially in the southern part of guangdo guangdong, the industry is taking off. government regulators help make this possible by giving foreign diamond processors a lot of encouragement. this becomes clear when you consider what the processors must put up with in india, an in