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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (36230)	7/17/2003 7:04:17 PM
From: RealMuLan	Read Replies (1) \| Respond to of 74559

ANALYSIS-Legacy of crisis taints Asian view of yuan advice Reuters, 07.17.03, 4:13 AM ET By Alan Wheatley, Asian Economics Correspondent SINGAPORE, July 17 (Reuters) - To western policy makers like U.S. Federal Reserve Chairman Alan Greenspan, it's an open-and-shut case that China should let its currency rise to slow a disruptive surge of foreign-exchange inflows. Seen from Asian, though, things are not so simple. To be sure, mercantilist Japan and South Korea have called for an appreciation of the yuan, or renminbi. And China itself has said for years it would eventually loosen the currency's tight bands. But worries that tampering with the yuan could stall Asia's main growth engine, coupled with mistrust of western policy advice dating back to the 1997-98 Asian financial crisis, mean Beijing enjoys considerable support across the region for its insistence that it will not act until it is ready to do so. ... "They would be very loath to appreciate at the moment given that they've got to keep growing fast to hold down unemployment, keep social stability and keep the party in power," said one regional economic policy adviser. "Why should they be interested in American views? I can't imagine that any pressure that the U.S. would be capable of bringing to bear would be enough to change them from that course," she added. ... "The market is getting too excited about these political and diplomatic pressures from the U.S.," said Frank Gong, a currency strategist with Bank of America in Hong Kong. "I doubt if China will yield to those kind of pressures." Andy Xie, Morgan Stanley's chief Asia economist, went further. If China buckled to international pressure now and cut the yuan loose, it would be vulnerable in future to each and every comment about its economy from U.S. officials, he said. "They will completely lose their freedom to act in the future," Xie told CNBC on Wednesday. "That's why it's very important for China not to act under pressure and, when it moves, it has to be in a position that they can control." (Additional reporting by Edwin Chan in Shanghai and Vidya Ranganathan in Singapore) forbes.com