ADB meeting ends, China's push to slow economy tops discussions

  • Business
  • Monday, 17 May 2004

JEJU, South Korea (AP) - China vowed Monday to slow down its economy gradually so that growth in neighboring countries won't suffer, as the Asian Development Bank wrapped up its annual meeting aimed at integrating the region's markets and reducing poverty. 

China's booming annual economic growth of nearly 10 percent has raised worries that inflation could spike, causing financial problems. Beijing has pledged to slow this growth, but economists warn that a precipitous downturn could roil economies throughout the region that depend on trade with their giant partner. 

On Monday, China's Vice Finance Minister Li Yong offered assurances that Beijing is engineering a gradual cooling off, noting that only a few sectors such as steel, cement and real estate, are overheating. 

"I'm quite sure that a 'soft landing' will be achieved,'' Li told delegates on the final day of the Asian Development Bank's conference. 

Finance ministers and central bankers from 63 nations were among the more than 3,200 delegates attending the conference for the Manila-based ADB, a financial institution that extends billions of dollars a year in loans and technical assistance to the region. 

China's blistering growth and its emerging role as Asia's hub of trade and manufacturing for everything from cars to sneakers has been vital to a surge in the region's fortunes. 

The ADB predicts that Asian economies will grow 6.8 percent this year, up from 6.7 percent in 2003. 

Analysts say China has taken appropriate steps - such as tightening lending rules to crack down on the investment speculation they blame for rising inflation - to slow its economy to a more modest 7 percent to 8 percent annual growth rate. 

"The earlier moves initiated by the authorities bode well for preventing larger problems in the future,'' Ping Chew, an analyst at international credit rating agency Standard & Poor's, said at an ADB seminar last week. 

Japan's Finance Minister Sadakazu Tanigaki and South Korea's Finance Minister Lee Hun-jai said they were confident that China was headed toward a soft landing. 

However, Lee Hun-jai later said that Seoul had "contingency plans'' for a worse-case scenario. 

He said global growth would keep the South Korea's export-dependent economy - forecast to grow by 6 percent this year -steaming along. 

Officially, the ADB conference agenda was devoted to budgetary matters, long-term poverty reduction plans and market integration. 

On the sidelines, finance ministers from the 10-member Association of Southeast Asian Nations (ASEAN), Japan, South Korea and China discussed adding to a US$36.5 billion currency swap scheme to help countries in the region defend their currencies from speculative selling following the 1997-1998 Asian financial crisis. 

Some view the scheme as a sign that the region's economies are moving toward a common currency, similar to the euro, or as a precursor to a possible Asian Monetary Fund that would rival the International Monetary Fund - the Washington-based global lender of last resort for nations in turmoil. 

But Cinnamon Dornsife, an international economics professor at Johns Hopkins University in the U.S. state of Maryland, said the scale of the swaps arrangement was still far too limited for Asian nations to rely only on each other during crises. - AP

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