CHINA CALLS FOR CLOSER TIES TO FIGH

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Subject: CHINA CALLS FOR CLOSER TIES TO FIGHT THE TURMOIL

CHINA CALLS FOR CLOSER TIES TO FIGHT THE TURMOIL
27.8.97/BANGKOK POST/BUSINESS
JOYCE LIU 
SINGAPORE, REUTERS

LI SEEKS ASEAN COOPERATION

Association of Southeast Asian Nations (Asean) should strengthen
ties to fight against speculative attacks on their currencies,
Chinese Premier Li Peng said yesterday.

"China and the Asean countries need to strengthen coordination and
cooperation in the financial field," Li told a group of businessmen
in Singapore during a three-day visit. 

Asean groups Brunei, Burma, Indonesia, Laos, Malaysia, the
Philippineis, Singapore, Thailand and Vietnam. Together they make
up China's fifth= largest trading partner, with trade tripling to
US$20.4 billion in 1996 from 1990.

"One reason for the recent currency crisis, in my view, is
international speculation, and the other is the bubble economy " Li
told the businessmen shortly before he was due to fly home to
Beijing.

"Sales in the property market outstripped demand," he said without
elaborating.

Despite Southeast Asia's rapid economic growth, it's economic
strength was still relatively weak and its financial systems were
inadequate, Li said.

That meant it bore "certain financial risks, which make it
susceptible to the impact of the turbulence of the international
financial market in the course of its development," Li said.

"We should intensify our coordination and cooperation in the field
of finance and step up exchanges of information to keep each other
informed so as to ward off international financial speculation," he
said.

Thailand was the first target of currency speculators in May,
triggering an economic crisis in which it became clear that many
financial institutions had over-invested in property.

China, a so-called dialogue partner of Asean, has contributed $1.0
billion to a $16.7 billion, International Monetary Fund-led
international bailout package for Thailand.

Malaysia, Indonesia and the Philippines have also seen a selldown
in their currencies over the past two months.

However, Li said Hong Kong, which Britain returned to Chinese rule
on July 1, has the economic power and foreign reserves to handle
the currency crisis.

"Under the "one country two systems" formula, Hong Kong handles its
own economy completely," Li said. "But Hong Kong has adequate
foreign reserves and is closely linked with China. I have not seen
any major fluctuations in Hong Kong so far."

Earlier yesterday, Hong Kong Financial Secretary Donald Tsang told
a media conference in Sydney that the Hong Kong dollar had moved
less than 0.2% during the recent Asian currency turmoil.