Fortune Global Forum told of need for Asia economic reform and China WTO entry
The recovery from the economic slowdown in the United States may take longer than many have thought, according to Chief Secretary Donald Tsang Yam-kuen.
Mr Tsang told the opening plenary of the Fortune Global Forum yesterday that more work was needed to reform Asian economies to help overcome the threat of the slowdown affecting the region.
He also called for President Jiang Zemin and US President George W. Bush to work together to help push forward China's entry to the World Trade Organisation and help stimulate the slowing global economy.
Mr Tsang, the former financial secretary, said he was less optimistic than many forecasters about the US economy.
'Many of them have said that there will be a rapid V-shape recovery in the fall of this year, [which will lead to] rapid growth in 2002,' he said.
Judging from the duration of past economic slowdowns in the US, which tended to last six to seven quarters, Mr Tsang said he believed a rebound might not appear until next year.
'If [history is] any guide at all, I would be of the view that the recovery from the present slowdown in the US economy might be a U shape going right to the early part of 2002,' he said.
Mr Tsang also warned that although most Asian countries had improved their government finances, balance of payments and banking regulations after being 'purified' by the financial crisis four years ago, recent social and political changes could bring volatility to their economies.
He cited his personal realisation in a recent finance ministers gathering that many of his counterparts 'were either sacked or in jail' after political changes in neighbouring countries, to illustrate how rapid political changes could impact on economic policies.
Sharp corrections in equity markets, which had wiped out an amount equivalent to 40 per cent of the region's gross domestic product growth, also threatened the recovery, the chief secretary said.
Mr Tsang called for greater determination among regional political leaders to carry out reforms to ensure the momentum of economic recovery.
'Those economies which are more efficient, more flexible . . . and particularly [those that] have the courage to undertake major reforms, large or small, [are] likely to emerge much stronger after this crisis than in the past.'
He suggested that China's accession to the WTO would be a key step in helping the global economy.
'We need some new impetus. The WTO question of China has become pivotal ,' Mr Tsang said.
'It is important for President Bush and for Europe and President Jiang to work together to ensure the accession of China into the [WTO].
'It gives at least some hope and some encouragement that we are going somewhere.'
Mickey Kantor, a former US secretary of commerce and trade representative, echoed Mr Tsang's view.
He said China's WTO entry would at least give a 'psychological' boost to the global economy, if not having an immediate impact in reality.
China should be allowed to join the WTO 'immediately' and negotiating countries should 'quit fighting over insurance and agriculture issues', he suggested.
In response to concerns that Hong Kong's competitiveness vis-a-vis the mainland might be threatened by the latter's WTO entry, Mr Tsang said he saw more opportunities than threats to the SAR.
He said the Government was expecting China's WTO entry to boost Hong Kong's annual gross domestic product growth by 0.5 per cent to one per cent, because it could provide more services supporting freer trade between China and the rest of the world.
'There is a lot of life after WTO for Hong Kong,' he said.
'In fact, we see it as an enhancement to Hong Kong's position.'
