Ron,
whereas Korea competes with Japan directly on over 50% of their products, China is not a significant competitor. In theory, the value of the yen is not as important to China as it is to Korea and may be Taiwan.
However, China's 8% growth target depends on a certain amount of foreign investments. Japan is third behind the SAR and US. If the yen is weaker and more importantly, if Japan is weaker, the level of investment from Japan may fall short of previous projections. I am not sure if this is something that devaluating the RMB will cure.
China may have to kick in other options such as reducing the interest rate, increasing rebates (as they have already done), attract foreign investments from other sources or just quietly print more money.
As much as I think that China, unlike Japan, is doing the right things, the problems they face are so massive that I am not willing to bet that they are enroute to recovery before taking another fall.
Ramsey
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