The world's biggest banking conference ended in Hong Kong yesterday having achieved a series of remarkable, if unintended, results which will affect the shape of the world's economies in the approach to the end of the 20th century. It redefined a communist superpower's (China) relationship with the capitalist world; it provided a global seminar at a critical moment in south-east Asia's financial and market crisis; and it removed any lingering doubts about Hong Kong's role as an autonomous financial powerhouse for the Asia-Pacific region. The annual meeting of the World Bank and the International Monetary Fund (IMF) was formally closed by the director of the IMF, Mr Michel Camdessus, who warned that Europe should now set its mind on scaling back "very high-cost" unemployment and social security benefit systems to ensure the success of European Monetary Union from January 1st, 1999. However, the EMU took a back seat at the gathering of the world's financial elite, with attention focused on south-east Asia's currency woes, China's new phase of modernisation and the growing problems of corruption. Bankers and foreign ministers could see for themselves that nothing much has changed in Hong Kong since communist China took over on July 1st.
If anything, China's image improved during the course of the meeting, thanks largely to Vice-Premier Mr Zhu Rongji, who impressed the world's financial elite and the Hong Kong population as a new, more open, breed of Chinese politician.
"In three days in Hong Kong, his wisdom, humour and self-confidence changed the image of the mainland leaders," said Apple Daily, a Chinese-language newspaper often harshly critical of Beijing. Bankers and financiers left Hong Kong more convinced than ever that China will forge ahead with growth rates above 6 per cent well into the next century.
Demonstrators took to the Hong Kong streets with placards blaming Chinese Prime Minister, Mr Li Peng for the 1989 Tiananmen Square massacre (which newspapers freely quoted), but "the heavens did not fall", as one Hong Kong journalist said. Mr Li could not hear the protests but he could see them on television in his Grand Hyatt suite. In the run-up to the handover there had been speculation that Mr Li would not tolerate such outrage on Chinese soil. Instead the message he got was that such demonstrations are more a safety valve than a threat to national security. However, the police presence was overwhelming and Mr Huang Chen-ya of the Democratic Party protested at the arrest of some demonstrators who tried to get close to the convention.
The World Bank/IMF conference reinforced international confidence in Hong Kong as Asia's most important financial hub. The 17,000 delegates and journalists also brought revenue to a city which has suffered a tourism slump of 35 per cent since the handover and a public relations fiasco. In the convention centre, large video screens blasted out the message that Hong Kong was the place where wonders never cease, flashing up sample wonders such as "the largest neon signs" and "the most Rolls-Royces". But a $2 million (£1.36 million) "100 Days of Wonders" campaign to keep tourists coming after the handover has flopped and earned the nickname "100 Days of Blunders'. One example: a Jackie Chan Fabulous Film Month attracted only two Japanese fans. Part of the reason tourists are staying away is high prices in the top Hong Kong hotels during the handover period. "They gouged everyone and then expected them to come back," said a disgruntled Hong Kong lawyer. The five-star hotels again charged exorbitant prices - $600 a night - for World Bank delegates. World Bank spokesman Mr Tim Cullen said it was the biggest event it had organised, with 2,000 delegates more than in Madrid two years ago. The conference ended on an upbeat note, with IMF officials predicting steady global growth of 4.5 per cent, and expressing confidence that the rescue package for Thailand would soon bring positive results.
"I feel encouraged by everything which took place here," Mr Camdessus told the final news conference. But, in remarks aimed mainly at France and Germany, he warned that it was a mistake to mislead people into thinking that the euro was the key to an inflation-free era of low unemployment. "I call on the leadership in Europe to at least tell the truth to the people of Europe: that the euro can be a wonderful perspective for Europe providing these issues are addressed squarely," he said, referring to costly unemployment and social welfare schemes. The Group of Seven nations said they were happy with the international response to Thailand's currency woes, but Bangkok should "implement vigorously" the IMF's rescue programme.
While there was sympathy for Thailand, there was none for Cambodia. Using unusually strong language, an IMF spokesman said the fund's $120 million three-year loan to Cambodia had been put on hold because of problems of governance which concern corruption and logging. The big drama at the conference was the war of words between US-based investor Mr George Soros and Malaysian Prime Minister Dr Mahathir Mohamad over speculative attacks in Asian markets. Mr Mahathir called Mr Soros a "moron" and said he would ban speculative currency trading, a threat later played down by his ministers.
Mr Soros called the suggestion a recipe for disaster, saying: "Dr Mahathir is a menace to his own country." While his intemperate remarks embarrassed other Asian leaders, Dr Mahathir received much sympathy and understanding from delegates. He is widely respected in the region for shaking Malaysians out of the inertia resulting from the colonial period and replacing ethnic divisions between Chinese and Malay citizens with national pride. He lost the war but Mr Soros gained no friends in south-east Asia.
