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GLOBAL ECONOMY
ACHARA ASHAYAGACHAT
PARIS AND BRUSSELS : The unfolding global effort to address the international financial crisis has become a blessing in disguise for the Asia-Europe Meeting (Asem), normally a bland talkshop, which opens tomorrow in Beijing.
Officials in Paris say France's presidency of the European Union (EU) can be measured by its success in defusing the financial crisis and conflict in Georgia.
So far, President Nicolas Sarkorzy has led the EU in searching for ways to update the Bretton Woods system and create a post-crisis financial infrastructure. Academics in Paris also conceded that the West has learned little from Asia's financial crisis.
Core issues remain liquidity and solvency while the regulative framework for hedge funds and corporate and banking governance needs real attention from all governments, said Jean-Luc Greau, the author of L'Avenir du Capitalisme.
The US recession will hit China and India, said Mr Greau. He added that their commodity-exporting and export-led economies will be hit hard, requiring new economic strategies.
China, which has been experiencing problems similar to Japan's in the eighties and nineties, would now have to listen to its European counterparts, he said.
But the true impact of Chinese banks' non-performing loans on the Chinese economy is still unknown to outsiders because of the country's closed society, said Valerie Plagnol, economic adviser to the office of the French EU Presidency.
Ms Plagnol said European countries would certainly be telling Asian counterparts that they are cleaning their houses and that they expect cooperation - meaning transparency, accountability and sharing of information.
Both economists expect the US and European recessions to hit Asia as investors rethink and roll over gains. There would be no miracle cure, they added.
However, Mr Greau was optimistic about the effects of the crisis on Thailand.
"The Thai economy has been diversified," he said. "You're based on agriculture but also have the backbone of manufacturing industries. You should fare better than other Asean colleagues."He added that, with a more protectionist global context, co-operation and innovative schemes to create niche markets would help. However, the key would be to kickstart the domestic market quickly and effectively.
Economic concerns are expected to supersede other issues - such as immigration and climate change co-operation - at the seventh Asem summit.
Asem features 43 European and Asian countries, European Commission officials, the Asean secretariat and new members including India, Pakistan, Mongolia, Romania and Bulgaria.
At the weekend, China will consult with other members on a chairman's statement on shoring up confidence in global financial markets.
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