China Should Learn from Latin America Crisis: Academics

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Last updated at: (Beijing Time) Friday, September 12, 2003

China Should Learn from Latin America Crisis: Academics

Chinese academics have urged the government to learn from Latin America in a bid to reduce financial risks and prevent crises amid increasing globalization.

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Chinese academics have urged the government to learn from Latin America in a bid to reduce financial risks and prevent crises amid increasing globalization.

Experts from the Chinese Academy of Social Sciences (CASS) have held a forum, the second this year, to study three major financialcrises in Latin America in recent decades and tried to find what China could learn to deal with similar problems.

The three crises, including the 1994 financial disorder in Mexico, the 1999 crisis in Brazil and the 2001 turmoil in Argentina, had severe impacts on Latin American economies, resulting in the first negative growth for the region, said Jiang Shixue, deputy director of the CASS Institute of Latin America anda leading Chinese expert on the region.

"Although the causes of the three crises are somewhat different,inappropriate currency policies and political factors were closelyinvolved," Jiang said. Proper currency policy and political stability were very important for preventing a financial crisis.

He stressed the importance of exchange rates, saying they were the bridge between the domestic economy and the international economy in the era of globalization. The Latin American experienceshowed that developing nations should adopt flexible currency policies.

However, China had to be cautious and maintain a stable currency policy, when liberalizing its financial sector, Jiang said.

Sun Jie, a researcher at the CASS Institute of World Economy and Politics, said the liberalization of China's financial market was inevitable, but the key issue for the government was how to maintain a healthy and stable domestic economic environment.

Jing Xuecheng, deputy director of the Research Bureau of the People's Bank of China, said the formulation of a crisis control policy was a long-term measure to prevent financial crises. Latin American countries were too dependent psychologically on the United States, the International Monetary Fund and regional financial organizations.

In the absence of a precaution system, these countries had to seek assistance from the Untied States or international financial bodies and donors, Jing said, adding that this had brought about enormous losses.

Source: Xinhua

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