It's not clear what lessons Asian economies can learn from the Greek economic debacle that brought doubt to the sustainability of the euro and threatened to drag Europe into a recession.

There were sporadic talks about the possibility of creating a unified Asian currency, but there has never been the political will in the region to pursue the concept seriously. The governments of most Asian economies, unlike those in the troubled economies of Europe such as Greece, Spain and Italy, are never known to be big spenders. They have exercised even greater fiscal discipline after the outbreak of the Asian financial crisis in 1997.

Although that crisis was also triggered by the failure of some Asian economies to service their ballooning foreign debts, their governments, with few exceptions, retained the political clout to implement austerity measures to meet the requirements for obtaining International Monetary Fund (IMF) aid.

The worst hit economies, including Thailand, Republic of Korea and Indonesia, had the option denied to Greece as a member of the euro zone to massively devalue their currencies to boost exports, which eventually pulled them out of the recession quagmire.

Hong Kong was a different story. Despite the meltdown of its property and stock markets, the Hong Kong government had steadfastly maintained the pegged exchange rate regime, the cornerstone of financial stability, against several massive attacks by international hedge funds. Hong Kong people endured more than five years of economic recession, made more painful by rapidly eroding asset values and rising unemployment.

During that time, the Hong Kong banking system was subject to a severe stress test as more and more borrowers were either unable or unwilling to pay back their mortgage loans. At one time, negative equity, where the market value of the property drops below the outstanding amount of the mortgage loan, affected nearly half of all new homebuyers.

But the overall rate of mortgage loan default had never risen to levels that could pose a serious threat to the banking system. That was because many Hong Kong families would rather scrimp on other expenses than to surrender their apartments to the receivers. What's more, banks in Hong Kong took the initiative to ease the burden of borrowers through aggressive loan rescheduling.

Hong Kong pulled out of the recession in 2003 on the back of the rapid economic growth on the mainland. By then, many other Asian economies had also begun to recover from the crisis that nearly brought them to their knees.

The underlying strength of many Asian economies lies in the resilience of their people who are willing to tighten their belts and work their way out of a tight spot. They are now watching the unfolding economic crisis in the euro zone and, perhaps, reflecting on the calamity that befell them not too long ago.

What they may learn are an affirmation of the Asian value that needs to be constantly refreshed and reinforced.

E-mail: jamesleung@chinadaily.com.cn

(China Daily 06/21/2010 page8)