Mike: Topic One...
Don't you think it will be inevitable there will be some local hot spots created by unhappy and unemployed workers?
Yes, I do. But there are many dissatisfactions in China today that bring revolt against the authorities on a regular basis. I wrote some time ago here about the history and relationship between the people of China and their leadership, yet it would be terribly presumptuous of me to pursue the topic.
If so, don't you see another strong crackdown coming?
Not necessarily. There was good restraint shown by PLA forces sent in to put down a riot in one of the Southern provinces last Fall. An armored vehicle was fire-bombed by angry protesters, yet I don't recall that the troops turned their weapons on the people.
I just don't see how China is going to escape economic damage when all the Asian Tigers are falling around them. It will eventually hit China hard. I can't see the government letting it get out of hand. Remember Tiannamen Square(I have no opinion on T.S. but use it only as example).
China is incurring damages as we speak. They are reacting to them very well. There are regional and provincial disparities that concern me, however.
Topic Two. Plus, the Chinese government is working very hard trying to keep the currency from falling. At some point in time, won't it be to their benefit to let it fall a little. Afterall, it must take a lot of their reserves to keep propping it up each time it
is attacked. So aren't they going to start worrying that their reserves are going to be spent on a depreciating asset and then let it fall?
I don't believe the end assessment showed the HKMA depleted any amount of their reserves while defending the currency attacks.
Are we speaking of the renminbi or the Hong Kong currency? China has other instruments still available. A devaluation of the renminbi at this point is not necessary. Though, as Stitch has mentioned, any number of events might force their hand.
The disposition of the U.S. Fed. must also be a consideration where both the HK dollar and renminbi are concerned.
If it falls a little, doesn't this help the unemployment situation making China more competitive with it's neighbors who have let their currencies weaken.
Not when the the competition can not produce or get its goods to market, e.g. Jakarta.
I believe Mr. Zhu has developed a set of "action points," that he is very aware of which contingencies must be implemented, and when.
Thanks very much for asking, Mike. |
