In the remote and still sunny days of early autumn, the sentiment was understandable. Asias currency crisis had hit south-east Asia with a vengeance, but it was largely confined to that region. The seven countries of the Association of South-east Asian Nations (Asean), which had started to make waves as their economies grew, were suddenly less able to strut the stage.
But the Japanese diplomat spoke too soon. As the crisis spread northwards and eastwards at the end of last year, it engulfed the much larger economy of South Korea. Japan itself became sucked in, with its faltering economy and spectacular bankruptcies in its sickly banking system. Since then the general assumption that Asia was on the way to becoming the new powerhouse of the world economy has been turned on its head.
At this stage, no one yet knows for sure exactly how and when the crisis will blow itself out. Yet in the swirling storm, it is already possible to discern some lasting consequences. So far Japans failure to provide economic leadership and the pricking of the Asean bubble has left Greater China in a position of relative strength.If that continues, economic relations within Asia as well as between Asia and the rest of the world may never be quite the same again, and political relations could change in their wake.
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There is a common thread in the origins of the crisis, even if it has hit different countries in different ways. Inefficient banking systems allowed excessive credit to build up, creating bubbles which caused untold damage as they burst. Japan has waited some seven years without addressing properly the troubles left by its own property bubble. The markets did not allow the weaker economies to wait so long.
One clue to the shape of things to come is the degree to which individual countries are truly prepared to address their problems. Another is the extent to which they have the institutional strength to impose painful economic and financial restructuring.
The once-proud countries of south-east Asia score badly on these counts. Their credibility with the markets has suffered badly. It will take several months of good export performance as well as a convincing record of reforms to restore the confidence of overseas investors.
Nor has Japan yet shown itself capable of extricating its economy from danger. The weakness of the yen and the governments failure to reflate the economy and sort out its troubled banking system are compounding the problems elsewhere in Asia.
At last months Asian summit in Kuala Lumpur, Ryutaro Hashimoto, Japans prime minister, described the regions economies as having been like a flock of cranes in synchronised flight. But Japan no longer had the strength to lead the formation, he said, because it had problems of it own.
Kim Dae-jung, South Koreas president-elect, has started off on the right track with an unprecedented admission of the need for economic restructuring, involving widespread job losses in the countrys hitherto protected labour market. If he persists - and it is still a big if - some economists believe South Korea could become the model for the new post-crisis Asia.
In sharp contrast, Indonesia, whose currency has fallen furthest, seems stuck in a morass. It is not surprising that alarm bells there have brought the IMF back for a second look, accompanied by a large delegation of US officials. What Indonesia needs immediately is to ensure that a sound, properly regulated, financial system can intermediate credit efficiently. Yet crony capitalism is so deeply entrenched that the cultural change required would normally take at least a generation.
To a greater or lesser degree the same applies across much of south-east Asia. Malaysia has greater institutional strength than Indonesia but, with total national indebtedness at 170 per cent of economic output, it still has to deal with an intractable economic problem. Thailand has weak institutions but, having run out of money first, it has at least been forced to turn to a government of technocrats that is starting to address the real problems in the banking sector.
The prospects for south-east Asia thus do not look good. Even a well run economy with high reserves such as Singapore is likely to feel the chill in 1998. The risk in this part of the region remains that, as a deep recession starts to undermine the entrenched position of national leaders, one country might declare a generalised default, sparking a new contagion which would carry the infection into other regions such as Latin America and eastern Europe.
But there are risks elsewhere as well. Chinas economy is gripped by a collapse in domestic demand, making it ever more reliant on exports to maintain the momentum of growth. Despite official denials many economists now expect the government to allow the yuan to fall this year, possibly causing the peg holding up the Hong Kong dollar to break - ironically just when similar pegs are being proposed for other countries. Such a development in Hong Kong would set off a new burst of jitters across the region. Whatever happens, Hong Kong faces a year of crippling pain as interest rates are held up to maintain the currencys value.
Yet some economists are more sanguine. Huan Guocang, a regional economist with Salomon Smith Barney in Hong Kong, believes China will reflate domestic demand this year, producing a quicker recovery than people expect. That would be good for Hong Kong.
Overall, economists note that the Chinese economies, including Singapore, have managed better than others. In some cases, such as Taiwan, this may be because they were at a different stage in the cycle anyway. But they also show more evidence of flexibility.
Ma Guonan, another Salomon economist, argues that there is their enviable record of being net savers over the years. Other Asian countries, he says, tend to be big spenders as well as high savers. With hindsight it should have been clear that something was wrong when Thailand and Malaysia simultaneously achieved high savings rates and a deficit in their balance of payments current account.
When the dust settles, China, which also has the political confidence to project its international presence, may thus find its relative position in the region strengthened even against Japan. That would make it more of an acknowledged regional leader.
For the rest there are three types of outcome. Thanks to its large cushion of reserves, Japan can afford to muddle along without fully addressing its banking and economic problems. If South Korea does tackle its problems head-on, as its president-elect promises, it will face perhaps two years of intense hardship as its banking sector and large companies shrink. But the recovery could be powerful when the restructuring is over. Other countries which have been forced to undertake radical measures because they have been right to the brink face similar prospects - a reason why Thailand could still emerge in the medium term more strongly than other south-east Asian countries.
In the third category come countries which continue to deny the problem. These risk a much deeper and longer damage. Indonesia is the best example: it is the country where the risk of generalised default is highest. That might cut it off from much new credit and investment for many years to come.
Even under the most optimistic scenario, it is hard to see the crisis being resolved soon. When currencies first started falling last summer, the immediate assumption was that exports would quickly rebound in south-east Asian countries as companies were made more competitive by devaluation. Indeed, the trade position has started to improve in many countries. But this is largely the result of the collapse of imports due to falling domestic demand.
The widespread nature of devaluations around the region mean that no one country has an edge. And banking and debt problems have squeezed credit, making it hard for exporters to raise the working capital needed to expand their business.
Full recovery will not take place unless four things happen at once. Japan must reflate and become a locomotive once again. The debtor countries must move convincingly on reform. Some debt must be refinanced to remove short-term liquidity pressures and allow a resumption of private capital inflows. And China must show that it can reflate its economy without resorting to damaging devaluation.
The prospect of all these conditions coming together looks remote. The danger of the crisis spreading and deepening remains significant. The one lifeline for most Asian countries now is exports, and the one market big enough to absorb them is the US.
So the outlook for the region is symbolised by the three men pictured above: Chinas economic policymaker Zhu Rongji; the US Treasury secretary Robert Rubin; and Japans PM Ryutaro Hashimoto. Individually, each can boast only limited influence on the way the crisis develops. But the economic policy their governments pursue will, collectively, decide whether the Asian crisis is as dominant an influence in 1998 as in the closing months of 1997.