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Pacific Rim Leaders Meet Amid Strong Economic Growth in Asia - 2003-10-16

Asian economies are booming as officials gather for the Asia Pacific Economic Cooperation (APEC) meeting this week in Thailand. After several rocky years climbing back from the Asian financial crisis of 1997.

This week's Asia Pacific Economic Cooperation (APEC) forum of 21 members is taking place as growth rates, especially in APEC's East and Southeast Asian nations, have picked up sharply, with China and Thailand reporting more than six percent annual growth. Financial analyst and author of the book The Dollar Crisis, Richard Duncan, explains one reason the Asian economies are doing so well.

"Generally the Asian economies are looking far better than they looked even six months ago," he said. "And really because of their large trade surpluses with the United States, they are attracting a lot of dollars into Asia - and those dollars are helping to re-float the economy."

The region's positive growth stands in contrast to the uncertainties faced by APEC's counterparts in the Americas, with the United States in particular undergoing an uncertain economic recovery.

Asia's growth will continue, analysts predict, especially since it has already weathered terrorist attacks, the Iraq war, and the Severe Acute Respiratory Syndrome virus.

Don Hanna, a chief economist and executive with Citigroup in Hong Kong, says growth will be especially good in the region's open economies. "I think in general the outlook for South East Asia is picking up…. Certainly for the most open economies like Thailand or Malaysia or Singapore."

Thailand's economy was the first domino to fall in the Asian financial crisis in 1997. Its economy hit a low point in 1998, registering at minus 10 percent. Prime Minister Thaksin Shinawatra is forecasting an amazing comeback, with economic expansion of eight percent into 2004.

Elsewhere in the region, Australian unemployment rates are at 13-year lows and New Zealand is reporting a healthy four percent economic expansion.

APEC member Russia is showing strong growth despite lower oil prices.

In North Asia, Japan's cautious recovery is continuing, but growth in South Korea is slipping to less than three percent.

It is China that has the fastest growing economy in the region.

The United States says China's boom is due in part to unfair trade practices. It accuses China of keeping its currency artificially low.

President Bush is expected to push the currency issue at APEC in talks with China's President Hu Jintao. "There has been a lot of politicking in the region about the currency situation in China, to as it were drive down the U.S. dollar against the … yuan to the benefit of American interests," explained James Sterling-Miller, economic analyst with Bangkok-based UOB Kay Hian Holdings Ltd.

Mr. Sterling-Miller says Asia is looking at China as an alternative to the United States for trade and investment. "China is becoming the real growth story in the region. I think that has probably changed over the last 18 months to two years where Asia [previously] was very much dependent on the fortunes of the U.S. economy," he said.

Managing director of Hong Kong-based Political and Economic Risk Consultancy, Bob Broadfoot, says China is likely to seize the APEC meeting as an opportunity to increase its influence.

"In a sense the U.S., especially if its economy isn't that strong, the U.S. isn't in a strong leveraging position. And that means China can almost by default increase its influence in the region if it simply behaves right," he said.

APEC is a regional group seeking trade liberalization by the year 2020. The group promotes economic cooperation among its members, which includes most countries with borders on the Pacific Ocean.