China's decision on yuan praised

China's decision on yuan praised

KUALA LUMPUR (Agencies): Senior officials from Southeast Asia and China gathered here yesterday for a two-day meeting to discuss the region's thorny economic problems.

Rodolfo Severino, the newly appointed secretary-general of the Association of Southeast Asian Nations (ASEAN), indicated that the region's economic well-being hinges on China's decision to stabilize its currency, the yuan, or renminbi.

Speaking to reporters yesterday, Severino said the ASEAN officials praised "China's commitment not to devalue the yuan and the renminbi" during the current economic crisis.

Several Asian currencies have lost 40 percent or more of their value since the Thai baht was floated in July, starting a chain reaction that has caused market turmoil worldwide.

Hard-hit by the currency fallout, ASEAN leaders have repeatedly requested China not to devalue its currency, which would release a flood of cheaper Chinese products and draw investors away from the Southeast Asian economies.

The regional leaders also hoped that China would stick to its decision, Severino said.

Meanwhile, Severino was quoted by Star newspaper as saying that ASEAN would set up an early-warning system against future financial crises.

Officials from member states and the Manila-based Asian Development Bank (ADB) will set up the regional surveillance mechanism as early as next month, Severino said in Kuala Lumpur.

"It will primarily gather data relating to credit and monitor macroeconomic indicators and capital movements within the region and externally," he told the newspaper in an interview.

"The analyzed data will enable the ministries to take precautionary or corrective measures early to prevent a full- blown crisis in future," he said.

Severino said the ADB had informed him recently that it would finalize the concept and structure of the mechanism this month.

ASEAN finance ministers, who met in Kuala Lumpur last December, had urged the ADB to draw up the mechanism, following the Asian financial crisis last July.

Thailand and Indonesia, together with South Korea, were forced to obtain multi-billion dollar financial bail-out packages, while other members like Malaysia and Singapore face slower economic growth.

ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.