Hong Kong businessman says United States mishandling Asian economic crisis
A Hong Kong businessman who owns 18 companies throughout the world said the U.S. government's ignorance of Asia has exacerbated the region's financial crisis.
"(U.S. Treasury Secretary) Bob Rubin doesn't know anything about Asia," said Ronnie Chan, who is chairman of the Hang Lung Development Group of Hong Kong, in a lecture to students at the School of Business. "The West's understanding of Asia is pitiful."
Chan said U.S. pressure on Asian countries to stimulate their economies has led to social dislocation in countries such as Indonesia, whose economy during the crisis, he said, has shrunk $150 billion to $50 billion. "We must make sure that the medicine doesn't kill the patient," he said. "The (U.S.-led) International Monetary Fund didn't consider that killing subsidies would have social consequences in Indonesia. There's been a lot of suffering. Let's give Asia time to fix the system."
He called the U.S. government's policies to force Japan to stimulate its economy through tax cuts and forcing its unprofitable banks to go bankrupt as "dumb." He said the Japanese have a strong manufacturing sector but a weak financial system, comparing the Japanese economy to a kangaroo with a withered leg.
"Japanese banks are really lousy," he said. "Lowering taxes to stimulate the economy won't work because the Japanese, who don't trust banks, will save the money, put it in a safe deposit box," said Chan. "Bankrupting bad banks will create a bigger financial crisis because the Japanese already don't trust banks."
The Asian economic crisis, said Chan, has set back Asian companies 10 to 20 years in one month. He said the crisis is the result of structural problems in Asian economies, owing primarily to the lack of regulatory controls over banks which do not have to report their business dealings to the public. As a result, banks have loaned money recklessly. "This is serious stuff," he said.
Chan blamed American triumphalism for the U.S. government's clumsy handling of the Asian crisis. "Now that communism is dead, Americans are all too happy to see crony capitalism defeated, to say 'I told you so.' Many Americans are happy to see they are right." He also said the Western press, in particular The New York Times and The Washington Post, is "ignorant as hell" about Asia.
Chan said the Asian crisis should dispel any notion that Asian countries are poised to dominate the global economy. "The 'Pacific Century' is nothing more than a fabrication," he said. "Just because Asia is growing 8 to 10 percent a year doesn't mean they are going to be competitive. With no technology or management, Asia can't be competitive in a global market. Japan is competitive because of their manufacturing companies, but the rest of Asia isn't competitive."
He said the U.S. has "seamless" legal, financial, regulatory and university systems (Japan's universities, he said, are harder to get into but easier to pass through) that make it "superior" to the rest of the world in technology development. In addition, the U.S. excels in management and the areas of the manufacturing process that have the most value: project development, commercialization and marketing. "It's not good enough to try harder; you must work smarter," he said.
The Hang Lung Development Group of Hong Kong comprises three publicly traded companies - Hang Lung Development Company Limited, Amoy Properties Limited and Grand Hotel Holdings Limited. Chan also co-founded and manages the privately held Morningside/Springfield Group, which has offices in Hong Kong, Shanghai, Taipei, Singapore, Geneva and Milan, and owns companies in 18 countries in Asia, Europe and the United States.
A gift from the Nintur Foundation, which is based in Gibraltar and was founded by the Chan family, established Fairfield University's Chinese language program last year. The grant, according to Dr. Eugene Murphy, director of the Asian Studies program, has enabled the University to broaden its curriculum in Asian Studies and reflects Fairfield's increasing concentration on international studies. There are now 134 students majoring in international studies, making it the seventh largest major.
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Posted on December 1, 1998