Mr Tsang, an elder statesman of Asian finance, said open trading states must adapt to the realities of modern finance.
"I do not believe in the sustainability of a small floating currency. Look at the pound, it's being attacked," (AtW's comment: you got that right Mr Tsang...) he said in interview with the Daily Telegraph.
"The euro is a good move. People have to abide by the Maastricht criteria, so it imposes discipline. Other options are less palatable if you really want to become a big strong economic union."
Mr Tsang, the chief Executive of the Hong Kong Special Administrative Region of the People's Republic of China, is a veteran of East Asia's currency crisis of the late 1990s and the SARS epidemic. As a Beijing loyalist, he offers clues into the current thinking of the Chinese leadership. His comments on sterling are a warning sign that China may ultimately prove reluctant to buy large amounts of UK Treasury debt in the future. (AtW's comment: who would want to buy debt denominated in currency that is sinking fast?)
Mr Tsang, as always wearing his signature bow tie, said it will be impossible for the Far East to launch its own currency union until China makes the renminbi convertible. This is not yet remotely on the agenda.
"We have to mark our time. One thing is clear, this is not something you can impose. You have to work for it, with the market, and back it up with a solid banking system," he said.
For the time being Hong Kong – now a province of China, but still a self-governing enclave of English Common law and free market economics – will have to stick with its long-standing tie to the dollar.
"This is a cast-iron link to which we have attached ourselves for the last three decades," Mr Tsang said. "We have gone through rough and smooth – turbulent times, prosperous times – with this link. We have no intention whatsoever to change. Any other option is a non-starter.
"We are trading territory: our trading portfolio is more than twice out GDP, and the link provides us with security. The US dollar disciplines the way we behave. We balance our books, we have no debt, and we make sure we have sufficient reserves."
Mr Tsang said Asian states were destined to continue buying US Treasuries and agency bonds whether they liked it or not. "What else do you buy? Which market will provide you a sufficient pool denominated in a secure currency? I'm afraid we're hooked. We're very strange bedfellows, and we have to live with it."
He said the global economic crisis was the result of "sharp arbitrage" between two sets of cultural and economic systems, but there is little point blaming either East or West for has happened.
"You can say that the lack of savings and overspending in US is the main cause, but you can equally say that massive savings on part of Asians and other surplus economies is part of the cause. So whom to blame?
"The world comes in different shapes and forms, with different economic structures, different stages of development, different regulatory regimes. With a young and vibrant workforce in Asia, with very little social security, we haven't got the facility to absorb savings internally so we have to buy treasury bills in US and Europe. The imbalances have led to the tsunami we now face."
Mr Tsang said no corner of the world would be spared the current global slump, but predicted that China would hold out well with growth of 8pc or 9pc next year. (AtW's comment: only by using Soviet style statistics...)
This may prove over-optimistic. The Chinese central bank slashed interest rates this week on signs of a very sharp slowdown in November. Beijing is increasingly worried about the eruption of violent protests in both the interior of the country the export hub of Guangdong.
"The global financial crisis has not bottomed yet," said Zhang Ping, chair of the National Development and Reform Commission in Beijing. "The impact is spreading globally and deepening in China. Excessive bankruptcies and production cuts will lead to massive unemployment and stir social unrest."
However, Mr Tsang said Hong Kong had weathered such storms before. "This global slowdown is part and parcel of the economic cycle and those with an open market just have to suffer."
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Source: http://www.telegraph.co.uk/finance/f...ngs-Tsang.html
Nu Liebor are going to cost this country a lot - they should have joined euro while things were "booming", but the City told out of it.
"I do not believe in the sustainability of a small floating currency. Look at the pound, it's being attacked," (AtW's comment: you got that right Mr Tsang...) he said in interview with the Daily Telegraph.
"The euro is a good move. People have to abide by the Maastricht criteria, so it imposes discipline. Other options are less palatable if you really want to become a big strong economic union."
Mr Tsang, the chief Executive of the Hong Kong Special Administrative Region of the People's Republic of China, is a veteran of East Asia's currency crisis of the late 1990s and the SARS epidemic. As a Beijing loyalist, he offers clues into the current thinking of the Chinese leadership. His comments on sterling are a warning sign that China may ultimately prove reluctant to buy large amounts of UK Treasury debt in the future. (AtW's comment: who would want to buy debt denominated in currency that is sinking fast?)
Mr Tsang, as always wearing his signature bow tie, said it will be impossible for the Far East to launch its own currency union until China makes the renminbi convertible. This is not yet remotely on the agenda.
"We have to mark our time. One thing is clear, this is not something you can impose. You have to work for it, with the market, and back it up with a solid banking system," he said.
For the time being Hong Kong – now a province of China, but still a self-governing enclave of English Common law and free market economics – will have to stick with its long-standing tie to the dollar.
"This is a cast-iron link to which we have attached ourselves for the last three decades," Mr Tsang said. "We have gone through rough and smooth – turbulent times, prosperous times – with this link. We have no intention whatsoever to change. Any other option is a non-starter.
"We are trading territory: our trading portfolio is more than twice out GDP, and the link provides us with security. The US dollar disciplines the way we behave. We balance our books, we have no debt, and we make sure we have sufficient reserves."
Mr Tsang said Asian states were destined to continue buying US Treasuries and agency bonds whether they liked it or not. "What else do you buy? Which market will provide you a sufficient pool denominated in a secure currency? I'm afraid we're hooked. We're very strange bedfellows, and we have to live with it."
He said the global economic crisis was the result of "sharp arbitrage" between two sets of cultural and economic systems, but there is little point blaming either East or West for has happened.
"You can say that the lack of savings and overspending in US is the main cause, but you can equally say that massive savings on part of Asians and other surplus economies is part of the cause. So whom to blame?
"The world comes in different shapes and forms, with different economic structures, different stages of development, different regulatory regimes. With a young and vibrant workforce in Asia, with very little social security, we haven't got the facility to absorb savings internally so we have to buy treasury bills in US and Europe. The imbalances have led to the tsunami we now face."
Mr Tsang said no corner of the world would be spared the current global slump, but predicted that China would hold out well with growth of 8pc or 9pc next year. (AtW's comment: only by using Soviet style statistics...)
This may prove over-optimistic. The Chinese central bank slashed interest rates this week on signs of a very sharp slowdown in November. Beijing is increasingly worried about the eruption of violent protests in both the interior of the country the export hub of Guangdong.
"The global financial crisis has not bottomed yet," said Zhang Ping, chair of the National Development and Reform Commission in Beijing. "The impact is spreading globally and deepening in China. Excessive bankruptcies and production cuts will lead to massive unemployment and stir social unrest."
However, Mr Tsang said Hong Kong had weathered such storms before. "This global slowdown is part and parcel of the economic cycle and those with an open market just have to suffer."
--------
Source: http://www.telegraph.co.uk/finance/f...ngs-Tsang.html
Nu Liebor are going to cost this country a lot - they should have joined euro while things were "booming", but the City told out of it.
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