East Asia summit opens with currency worries

East Asia summit opens with currency worries

HONG KONG (AFP): Political and business leaders gathered here yesterday to start the East Asia Economic Summit, with the region's currency worries and China's promises to speed reforms taking center stage.

The chairman of China's State Economic and Trade Commission, Wang Zhongyu, told the opening session of the three-day talks there would be faster reform of state-owned companies in a bid to create world-class firms "with names in the Fortune 500" by the turn of the century.

Southeast Asia's economic problems were also subjected to scrutiny, with a leading U.S. academic saying they were more troubling for the rest of the world than the Mexican peso crisis of 1994-95.

Steve Hanke said deflationary forces in the region would "send shock waves through the global capital markets."

Hanke, a professor of applied economics at Johns Hopkins University and a former adviser to Argentina's government, said Asian economies account for almost a quarter of world exports of goods and services, compared to just over four percent for Latin America.

The first day of the summit, organized by the Geneva-based World Economic Forum, was devoted to China's economic development but the currency crisis is expected to be the main focus of talks.

Philippine President Fidel Ramos, Singaporean Prime Minister Goh Chok Tong and Belgian Premier Jean-Luc Dehaene will all address the forum along with Hong Kong Chief Executive Tung Chee- hwa.

Malaysian Prime Minister Mahathir Mohamad was invited to the meeting, but declined, according to organizers.

Mahathir has blamed international currency dealers for the crisis gripping southeast Asian countries, singling out billionaire US financier George Soros. Soros has in turn criticized Mahathir's leadership.

The Malaysian premier has also hinted the crisis could have been caused by a Jewish conspiracy, noting that Soros is Jewish. Wang told the summit that China's economy will grow by more than eight percent per annum in the years to 2000.

He said inflation would be kept under five percent, and with annual growth of seven percent into the next century, China would become an "important member and reliable partner of the world economy in general and East Asia in particular."

Wang said reform of loss-making state firms was already paying dividends, with sales growing 14.3 percent in the past five years and profits and tax revenues increasing by 10.5 percent.

He said the 1,000 largest companies would be organized into big companies and business groups which would enjoy autonomy in investment and financing. "By 2000, big corporations will be internationally competitive...with names in the Fortune 500."

One session of the summit is to be devoted to the currency crisis, which has slashed 30 to 50 percent from the values of the Thai, Indonesian, Malaysian and Philippine currencies against the greenback in three months. The crisis was sparked by the July 2 float of the Thai baht.

The region's environmental woes, including thick smog caused by Indonesia forest fires which is blanketing southeast Asia, will also be highlighted.

The World Economic Forum organizes the annual summit of international business and political leaders at Davos in Switzerland and a series of regular regional conferences such as the East Asia Economic Summit.

North Korean delegates to the summit demanded the media be excluded from a briefing by one of Pyongyang's top trade officials, forum sources said.

State Commission of External Economic Affairs Vice Chairman Kim Mun-Song is to address a summit session Wednesday on the prospects for foreign investors in North Korea.

Officials did not give a reason for the demand but were adamant no journalists be allowed to attend the speech.