Asian crisis and global economics

It took a speech from United States President Bill Clinton to remind the world of one vital, but strangely neglected factor in the excess of debate over the Asian economic crisis.

On his way to attend the Asia-Pacific Economic Cooperation summit in Vancouver, Mr. Clinton drew attention to the inter- dependence of the world's major economies, pointing out that millions of American jobs and a third of U.S. exports are dependent on trade with Asia. The same is true for the rest of the Western world and, if this message can be reinforced in Vancouver over the next couple of days, it may broaden the nature of the discussion and lead to a positive re-assessment of the strengths and weaknesses of world markets.

Too much concentration has been focused on apportioning blame and seeking scapegoats as the currency collapses rebound around the region. Globalization is a word that somehow slipped from the lexicon of Asian leaders and financial gurus in the resulting chaos. Now that it has been reintroduced, the situation can be seen as one which threatens the world economy, and is potentially just as devastating to the developed nations as it is in the Asia Pacific region.

That recognized, the summit is an opportunity to look positively on what is admittedly a painful, but salutary, experience and to examine the options for change. Mr. Clinton has pledged U.S. help in stabilizing and strengthening the region's financial markets, but a permanent remedy requires the worst affected countries to completely restructure their financial markets, reform their banking systems, and reevaluate their economic strategies.

In the immediate future, there is little cheer on the horizon for countries whose difficulties arise from over capacity and falling demand, but economists appear united in the view that the long-term future remains positive. Hong Kong is fortunate in having pursued farsighted policies which led to a change from a manufacturing base to a service economy.

The transparency of the system, the culture of a level playing field, and the common law system are the bulwarks of a resilient economy. But there cannot be total immunity from the Asian "flu", either here or in the rest of the world.

-- South China Morning Post, Hong Kong