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To: Elroy Jetson who wrote (11793)12/21/1997 5:33:00 PM
From: Elroy Jetson  Respond to of 25960
 
Let me clarify one point. When I said the value of the Chinese currency has been falling, this is not reflected in official rates as the Chinese currency is still pegged at a fixed rate.

While this fixed exchange rate has stregnthened China and Hong Kong for the present, it also means that China can olny maintain their high reserves of foreign currency by refusing to authorize most requested transfers by Chinese companies into foreign currencies. It also makes China's exports less competetive and makes the country far less attractive to foreign investors. Why invest a Dollar when you know you will exchange it for $0.40 of purchasing power in China?



To: Elroy Jetson who wrote (11793)12/22/1997 10:20:00 PM
From: John Chalker  Respond to of 25960
 
Elroy, Please remember that all the banks in China are owned by the government. This is a different situation than in most other countries worldwide.

<<It was CNN that reported that China had just lowered their bank lending rates from 9% to 1%. I haven't seen this confirmed elsewhere and if true, I'm not sure which firms have access to borrow the money.>>

Chalks


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