Can ASEM halt ‘financial tsunami’?
Cast in the role of global savior in the unfolding financial turmoil, China is playing host to a meeting of Asian and European leaders in Beijing this week that is expected to castigate the Anglo-Saxon model of capitalism and press for a reshaped global economic order. “Can Asia be global economy’s best hope,” asked an editorial in the Economic Observer last week. Noting that Asia
hardly played any role during the global economic recovery after the Great Depression of 1929, the paper suggested that the continent’s established and emerging economies constituted the world’s best chance for recovery after the “financial tsunami”.
“And even if the Wall Street demise does not instantly signify the triumph of Mahathir’s Asian model, it is the beginning of a much-needed readjustment of economic power in the world,” it concluded. More than 40 leaders will converge in the Chinese capital for the 7th Asian European Meeting (ASEM) summit from Oct. 24 to 25 to discuss the global financial crisis.
Aside from the 27 EU countries, 10 ASEAN countries, the European Commission, China, Japan and South Korea, the summit will be attended by three other Asian countries — India, Pakistan and Mongolia. The talks will be co-chaired by France, which holds the European Union’s presidency, and China. “China maintains that the international community should strengthen cooperation and jointly handle the current financial crisis on the basis of equal consultation,” foreign ministry spokesman Qin Gang said. But he warned that “developing countries’ interests and concerns should be fully respected and safeguarded.”
China — a major emerging economy which sits on 1.8 trillion US dollars worth of foreign exchange reserves — has been looked upon as an important player to lead the way out of the global financial meltdown. US Treasury Department officials and politicians have all called on Beijing to show a pro-active attitude and join efforts with the Western world to fight the worst financial crisis since the Great Depression. Qin Gang said Beijing had adopted a
“responsible and constructive attitude” in dealing with the crisis. However, latest economic figures show that China is also vulnerable to the effects of the global economic slowdown.
“Even as we criticise Wall Street’s excesses, we should be aware that China’s model of financial operation is not necessarily the answer,” said a commentary in the 21st Century Economic Herald. “True, Chinese banks are stable and they don’t pursue excessive profits blindly. But they are far from free from red tape and administrative interference.” According to Qin Gang the ASEM summit offers the “perfect platform” for leaders to discuss ways of dealing with the crisis. British Prime Minister Gordon Brown has proposed a global system of financial supervision that would empower international bodies including the International Monetary fund to monitor global markets and act as early warning systems. French President Sarkozy —one of the summit’s coordinators — has pledged to use the meeting as a platform to persuade Asian nations to take part in a plan for the rebuilding of international capitalism. Chinese analysts anticipate that the summit may produce an agreement for the establishment of a joint trust fund between Asia and Europe.