PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | CLIPS | 2001 | CHINA URGED TO EASE ASEAN ANXIETY

China urged to ease Asean anxiety Staff Reporter Hong Kong iMail Thursday, June 22, 2001 Robert Lees of the Pacific Basin Economic Council says Asia is unlikely to return to growth unless Japan's economy rebounds or China assumes the role of the region's growth engine. LEADING business lobby group Pacific Basin Economic Council will urge Chinese trade officials to push for more foreign investment in Southeast Asian countries to ease their anxiety about the mainland's growing economic power. Robert Lees, secretary-general of the council, which represents companies with US$4 trillion (HK$31.2 trillion) sales and 10 million employees, said Asean (Association of Southeast Asian Nations) countries viewed China as a double-edged sword - a driver of the regional economy and a supplier of cheap products.``Asean has got a lot of paranoia,'' he said. Mr Lees recently met with senior trade officials from Japan, Malaysia, Singapore and Thailand and is scheduled to meet senior mainland officials later this month. China is the only country in East Asia that will likely maintain economic growth of around 7 per cent this year. All other countries are suffering from a rapid slowdown on the back of sagging global demand. Mr Lees said Asia was unlikely to return to healthy growth unless the ailing Japanese economy rebounded or China assumed the role of the region's growth engine. Japan's current reforms were on the wrong track, he added. The depreciation of the yen, restricted markets for foreign goods and a trade surplus were sucking energy from its neighbours. He expected Japan would need three to five years to stage a rebound and integrate itself into the world economy, while China would surpass it to become the economic and political centre of the region. ``China is taking that role partly because of very good policy and a long-term goal and objective in meeting them,'' Mr Lees said. He said Asean countries also had to open their market in order to climb out of the economic doldrums. Trade protectionism was the major hurdle for economic growth in the region, and Asean countries needed to form a free trade zone similar to the North American Free Trade Agreement (Nafta). ``Because of political problems, there's no leader coming forward from Asean to say `we have to drop our petty squabbles, we have to form this unit' - there is the need for strong leadership,'' said Mr Lees. He said Asean officials also expressed serious concerns about the failing US economy, which they relied heavily on. In the wake of the technology correction, the Federal Reserve continued to ease interest rates, which, together with the introduction of tax rebates and the expectations of lower taxes in the future, would ensure the weakness of the US economy to be short-term, Mr Lees said.