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Asean to unite against monetary moves by US, China: Korn

By Wichit Chaitrong

The Nation

Kyoto

Asean finance ministers are expected to express a united position to their US and Chinese counterparts about the appreciation of their currencies caused by the policies of the two giant economies.

However, Foreign Minister Korn Chatikavanij said yesterday that he did not agree with Thai exporters who are demanding that the central bank re-impose capital controls after the US Federal Reserve announced it was injecting US$600 billion (Bt17.8 trillion) into the US economy.

“The controls will not work, since the liquidity injected by the US is overwhelming,” Korn said in response to complaints about the baht’s appreciation.

He said Philippine Secretary of Finance Cesar Purisima also expressed his concern about the appreciation of the peso, as money repatriated by Filipinos working aboard has dropped.

Korn said he did not agree with the US proposal to address the current-account issue by targeting an account deficit of no more than 4 per cent of gross domestic product.

“Asean countries are good global citizens, as we allow our currencies to rise when we have current-account surpluses, but there are some countries that have pegged their currencies,” Korn said.

Targeting the current account will not solve the real cause of the problem, but might lead to protectionism that would adversely impact global trade, he said.

Korn also said Asean would explain to the Chinese finance minister about the impact of currency appreciation on Asean economies.

However, he conceded that Asean countries benefit from the stability of the Chinese economy. Korn said he understood when China argues that any fast appreciation of the yuan could destabilise its economy.

“As we benefit from China we also have to take some risks” associated with the slow rise of the yuan against the dollar, Korn said.

Many economists have argued that Asean economies are at a disadvantage, since their currencies rise much higher than the yuan against the dollar, resulting in their losing competitiveness to China in the global market.

Analysts also believe that targeting the current-account rate is a US move to pressure China, which has a large current-account surplus with the United States and opposes Washington’s demand to let the yuan appreciate.

-- The Nation 2010-11-06

[Naam]

Korn also said Asean would explain to the Chinese finance minister about the impact of currency appreciation on Asean economies.

an excellent idea as the chinese finance minister has no idea and needs that explanation

[kuffki]

While i do see the position of ASEAN members, i have hard time believing that China or USA will care much about what those have to say.

For both super powers their main priority is their own economy and its needs not the economy's of country's such as Thailand or Philippines.

[LaoPo]

Korn also said Asean would explain to the Chinese finance minister about the impact of currency appreciation on Asean economies.

an excellent idea as the chinese finance minister has no idea and needs that explanation

I sometimes wonder if Thailand and other nations have a single clue of what's going on in China....

As an example:

Guangdong Province with some 100 million people alone has a GDP (nominal) of US$ 572 Billion in 2009 whilst Thailand with some 66 million people has a GDP of US$ 539 Billion.

Of course quite impressive for Thailand but Guangdong is just one province in China and is still growing much faster than Thailand.

France, with the same population of Thailand as a staggering GDP of US$ 2.676 TRILLION...

Just to name some examples and that I agree with Herr Naam and that the Minister of Finance will treat his colleague from Thailand with respect and serve him a nice dinner.

Next day: business as usual; China and the US" priorities are overseas, not their neighbors

LaoPo

[Naam]

...I agree with Herr Naam and that the Minister of Finance will treat his colleague from Thailand with respect and serve him a nice dinner.

...and perhaps whisper in his ear "with all due respect comrade, you are an àsshole".

[cloudhopper]

"Finance Minister Korn Chatikavanij yesterday supported the US Federal Reserve's plan to inject another $600 billion (Bt1.8 trillion) into the US economy.

"Let's see how that pans out," the finance minister said in an interview with Bloomberg Television ahead of an Asia-Pacific Economic Cooperation (Apec) forum in Kyoto, Japan."

Like all politicians he plays any tune on request, however Thailand would be much better off not following the US and it's even dumber attached-at-the-hip twin China into financial oblivion. Anyone who believes that state-manufactured GDP numbers have any bearing on real wealth is an idiot.