"The Chinese side said they are ready for the Bank of Thailand to talk with the Chinese central bank on a currency swap deal," Thaksin told reporters after hosting a dinner for Zhu at his seaside mansion in Cha Am.

Thaksin said that so far there had been no discussion as to the size of the deal with the central Bank of China.

Thailand recently signed a similar accord with Japan, allowing it to receive US dollars and other foreign currencies in case of a financial crisis in return for payments made in the national currency.

With the currency backup, a country faced with a threat to its foreign exchange reserves could intervene in exchange markets to prevent a free fall in its own unit.

"This will be a special reserve, held apart from our foreign reserves, which can be used in case of emergency," Thaksin said.

The premier said that Zhu also gave assurances over China's planned purchases of Thai goods this year, including 200,000 tons of rice and 580,000 tons of rubber.

"China reassured us that they will not buy less rice and rubber than they bought last year," he said.

China also agreed to look at extending to Thailand special tax rates currently offered to its neighbours Myanmar and Laos, which would make Thai-made goods more competitive in the huge Chinese market.

Zhu, who is to leave Thailand later Tuesday, spent his last night in the country at the seaside resort town of Hua Hin where he was granted an audience with Thailand's King Bhumibol Adulyadej.

(Chinadaily.com.cn 05/22/2001)