Hong Kong moneymen join ride to rescue euro

PUBLISHED : Wednesday, 13 June, 2012, 12:00am
UPDATED : Wednesday, 13 June, 2012, 12:00am
 

Senior Hong Kong financial officials will join President Hu Jintao's delegation to the G20 summit in Mexico next week when China's leader is expected to spell out his terms for coming to Europe's economic rescue.

Foreign Affairs Vice-Minister Cui Tiankai , who is responsible for preparing China's delegation to Los Cabos, said in an interview in Beijing on Monday that China had already taken precautions for a worst-case scenario in the euro zone.

'A total collapse of the euro zone is very unlikely because no one will benefit from it,' Cui said. 'We have been planning for the worst, but that does not mean the worst will happen.'

Hong Kong's Financial Secretary John Tsang Chun-wah and Hong Kong Monetary Authority chief Norman Chan Tak-lam are expected to join Cui at the summit. They are expected to discuss with other experts in the Chinese delegation their ideas for dealing with any fallout from the euro zone. The two have been briefed by chief executive-elect Leung Chun-ying to keep a close watch on the crisis.

Europe's financial difficulties could deteriorate after debt-plagued Greece holds its second general election just a day ahead of summit, and the impact on both the mainland and Hong Kong economies could be severe.

In an interview with the South China Morning Post, Cui said: 'We need to take some preventive measures and make minor adjustments to our policies from time to time. We should not wait until something very serious happens and then make drastic changes.'

He added that he believed European leaders knew what had to be done to tackle the economic crisis but were divided on where the responsibility for the financial burden lay.

Although China was willing to help Europe, Cui dismissed concerns that it would be purely an 'altruistic act'.

'China does not want to see the current crisis in Europe deteriorate. It greatly affects China's exports and economy as well. It is not a so-called case of 'the poor saving the rich', as described in some comments.'

Cui added that while China was ready to help rescue the euro zone, it would also be looking to diversify its investment scope. 'We'll pay more attention to some real projects with good assets,' he said.

He also called on Europe and the United States to remove political bias against Chinese companies, which had seen the failure of a number of attempts by mainland businesses to invest overseas

'They should realise it is high time for them to truly remove trade barriers and trade protectionism,' he said. 'But also, it takes time for the Chinese companies to learn and mature in conducting business abroad.'

Cui added that China should not be blamed for the downturn in the US manufacturing sector - this was the result of companies deciding to move production to China, such as computer maker Apple outsourcing its production to Foxconn, the Taiwanese company that has factories on the mainland.

Cui also said a meeting between Hu and Obama was planned on the sidelines of the G20 summit.

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