China urges Asian ties to fight currency turmoil
China urges Asian ties to fight currency turmoil
SINGAPORE (Reuter): China and member states of the Association of Southeast Asian Nations (ASEAN) should strengthen ties to fight against speculative attacks on their currencies, Chinese Premier Li Peng said yesterday.
"China and the ASEAN countries need to strengthen coordination and cooperation in the financial field," Li told a group of businessmen in Singapore during a three-day visit.
ASEAN groups Brunei, Myanmar, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Together they make up China's fifth largest trading partner, with trade tripling to US$20.4 billion in 1996 from 1990.
"One reason for the recent currency crisis, in my view, is international speculation, and the other is the bubble economy," Li told the businessmen shortly before he was due to fly home to Beijing.
"Sales in the property market outstripped demand," he said without elaborating.
Despite Southeast Asia's rapid economic growth, it's economic strength was still relatively weak and its financial systems were inadequate, Li said.
That meant it bore "certain financial risks, which make it susceptible to the impact of the turbulence of the international financial market in the course of its development," Li said.
"We should intensify our coordination and cooperation in the field of finance and step up exchanges of information to keep each other informed so as to ward off international financial speculation," he said.
Thailand was the first target of currency speculators in May, triggering an economic crisis in which it became clear that many financial institutions had over-invested in property.
China, a so-called dialogue partner of ASEAN, has contributed $1.0 billion to a $16.7 billion, International Monetary Fund-led international bailout package for Thailand.
Malaysia, Indonesia and the Philippines have also seen a selldown in their currencies over the past two months.
However, Li said Hong Kong, which Britain returned to Chinese rule on July 1, has the economic power and foreign reserves to handle the currency crisis.
"Under the 'one country two systems' formula, Hong Kong handles its own economy completely," Li said. "But Hong Kong has adequate foreign reserves and is closely linked with China. I have not seen any major fluctuations in Hong Kong so far."
Earlier on Tuesday, Hong Kong Financial Secretary Donald Tsang told a media conference in Sydney that the Hong Kong dollar had moved less than 0.2 percent during the recent Asian currency turmoil.
Li, leading a 115-member delegation, arrived in Singapore on Sunday after a four-day visit in Malaysia.
He also met Singapore President Ong Teng Cheong and Prime Minister Goh Chok Tong and was due to meet Senior Minister Lee Kuan Kew, who was Singapore's prime minister for more than 30 years.