INTERVIEW: New Asia crisis unlikely - Liveris

19 June 2007 19:47  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS news)--The chances of another Asian economic crisis rivalling the catastrophe of ten years ago are slim, Dow Chemical's chief executive and an economist said on Tuesday.

"Ten years on, there's no question that the Asia of today is much more sophisticated in the capital markets flow on a global basis," said Dow chairman and chief executive Andrew Liveris in an interview with ICIS. "They use all the methods, technologies and techniques in Western-style decision making. So now all our investing parameters are similar."

The so-called China bubble is not likely to burst, as the government has a firm handle on the economy, said Fred Peterson, president of New London, New Hampshire-based Probe Economics.

"Everyone worries about China. If the Chinese stock market or banking system came unglued, the result could be worse than the 1997-1998 crisis, but it seems like they have pretty good control over things," said Peterson. "The sky has been predicted to fall a lot of times, but I don't think people are paying attention to that anymore."

"China is such a unique economic model because of the role of state. So far, they've proven to be exceptional managers in controlling excesses such as corruption and poor investment decisions," said Liveris.

"Their ability to remove the shackles of inefficiency in state-owned enterprises and turn them into modern industrialised businesses has been incredible. Whether they can do that on the financial side remains to be seen,” Liveris said.

“But I believe that continued liberalization of China's economy and alignment with the international system of trade and finance will continue to attract investment and keep China on its remarkable path to prosperity,” he added.

The sheer volume of real economic growth may mean there is no bubble, said Peterson.

“China is driven by infrastructure investments. People think it's driven by exports, but it's not," he said. “A big part of their GDP [gross domestic product] is infrastructure and other investments. They need them and can finance them. It keeps people working and so what's the problem? The only problem is if they build too much plant capacity that can't be sold.”

“My experience with China over the past decades has proven that from its emergence in the Deng Xiaoping era in the early 1980s to 25 years later, the chances of having an implosion of the magnitude of the Asia crisis happening because China mismanages itself is very slim,” said Liveris.

Look for the full story and Global Report on the Asian economic crisis in the 2 July issue of ICIS Chemical Business Americas.

 

By: Joseph Chang
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly