I know we are beating a deadhorse in our debate about whether or not China will devalue, so I thought I would only post new information about this subject. There seems to be about 10 articles a day from US money managers, economists, financial reporters, etc. concerning devaluation. I would say it's 40% "Yes, they may." vs. 60% saying "No way."
But I did find an article strictly from the Japanese perspective concerning the Asian Crisis. Interesting what they have to say. Particularly what they say in the fourth paragraph. Sounds like they are enjoying the devaluation of ANY currencies in Asia, contrary to the political face their government puts on. You know they would never talk like this if they thought their conversation was going to be published in a US newspaper. I obviously got this from a Japanese paper. Very interesting and telling comments.
MikeM(From Florida)
>>Japanese Firms Still Gung Ho on Asia
Ko Hirano Daily Yomiuri Staff Writer
Asia's high market potential, diligent workforces and high savings rates will continue to attract Japanese investment, even though the region currently is undergoing economic turmoil, panelists said in the third session, titled "Japanese Corporations' Asian Strategy Today."
The five business leaders also agreed that the Asian economic crisis was unlikely to change the medium- and long-term business strategies of Japanese companies in Asia--namely, direct investment, technology transfer and personnel training toward the eventual localization of operations. At the same time, the panelists expressed optimism that troubled economies would recover in the near future. The discussion was moderated by Mitsuo Kono, chairman of the Domestic and Foreign Information Institute.
"Our business operations in Asia may be slightly reduced due to the crisis, but our basic strategy will not change because there is huge potential for telecommunications equipment in Asia," said Iwao Shinohara, associate senior vice president of NEC Corp. `The crisis has cut the sales of our products in Asia by 15-20 percent, but I think financially troubled Asian countries will get back on track in a couple of years," said Yasuo Morimoto, vice president of Toshiba Corp., pointing out that the infrastructure market in Asia is worth about 150 trillion yen.
Koji Hasegawa, director of Toyota Motor Corp., predicted that the Asian economy would recover and enjoy an annual growth rate of about 5-6 percent after structural adjustment. Keiichi Koseki, executive managing director of Ajinomoto Co., said, "The drop in value of Southeast Asian currencies lowered the dollar-based production cost, thereby boosting cost competitiveness." Morimoto expressed a similar view. "The depreciation of currencies will not hurt us because it will help us increase exports," he said. The price competitiveness of Ajinomoto's products would be boosted if the Chinese currency were devalued, Koseki added.
The Chinese economy and the possible devaluation of the yuan were central issues in the discussion. Fumiaki Fujino, managing director of Itochu Corp., predicted that China would shift from an export-oriented development pattern to a development pattern led by domestic demand. Labor-intensive industries would shift from coastal areas to the inland region, which is inhabited by about 900 million people, he said. "The key to the future of China is how the nation will reform state-run enterprises and how it will deal with unemployment arising from the envisaged reforms," It is expected that 11 million people will be laid off following the privatization of state enterprises, he said.
The panelists agreed that it was unlikely that China would devalue the yuan in the near future. China probably will not devalue its currency because it wants to develop an environment for stable economic growth using foreign capital and investment, they said.<<
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