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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Tom who wrote (1222)	1/27/1998 2:57:00 AM
From: Tom	Respond to of 2951

Statements on the PRC v. Taiwan issue. (For those who may be unadvised.) Central to this issue on the two Chinas is not so much whether the two peoples favor reunification, but an agreement on the compositon of the government that would generate and conduct policy for a unified China. The two Chinas are, today, very different places; yet not irrecoverably so. More than 85% of Taiwanese were born in Taiwan. Familial remembrances of the mainland, passed-on through parents, are the only remaining ties between the two Chinas, save one -- heritage. Do not doubt the potency of its binding. Also, know that China policy-making necessarily involves the People's Liberation Army (PLA). With an abundance of vested interests in capital enterprises, it was a strong statement from within the PLA that opposed the desire of the Beijing hard-liners to return to the "old ways" on the heels of Tiananmen. The PLA has given other indications of their desires which I will not endeavor to list here. Suffice it to say, that the PLA and the PRC need the technology and technological skills that Taiwan possesses. The PRC sees a more rapid and orderly progression for their economy once availed of the tools Taiwan has to offer. Additionally, one day, as Taiwan industry continues to grow and diversify, it will require the cheap labor that the PRC can offer. Note that it is the PRC that attempts to enjoin Taiwan, not the other way around. Persons close to the situation, such as Singapore's Senior Minister Lee Kuan Yew, feel that reunification is nearly impossible under the current Taiwan leadership. Recent indications that the U.S. is leaning toward reunification is a direct result of this. Taiwan will become increasingly isolated should it continue to refuse sincere attempts at dialogue on the part of the PRC. These are but the main concerns on either side of the PRC v. Taiwan issue. Such concerns can only be addressed via meaningful exchanges at the highest level. Mark well the moment conferencing at that level begins. The two Chinas sharing, amicably, the significant resources of each would provide for industrial growth of immense proportions. Many, both within and beyond the two affected parties, are convinced that now is the optimum moment. This window of opportunity will not remain open forever. The reason for this is, that in order to progress satisfactorily, a China without reunification must necessarily evolve away from what might have been and disregard the attendant possibilities. The pain of such an evolution will provide for some unpleasant situations. MORE TO POLITICAL DISPOSITION The existence and extent of any conflict within the Beijing heirarchy runs counter to any attempt at reunification. The best remedy for this conflict is well-constructed and consistent fiscal and monetary policy, both of which Mr. Zhu is striving to provide. It goes without saying that there must also be the appearance of some success in the restructuring of the state-owned enterprises (SOE) as well as the nation's banking system. But, it will be Zhu's economic efforts that win praise for any perception of resiliecy emanating from the mainland economy. Listen well to anything Mr. Zhu has to offer. (Note: It was Mr. Zhu Rongji who once stated that "One day ALL will know the truth of what happened there." See the conflict? Li Peng and Mr. Zhu are not great pals.) Consider the above and know that any hope for reunification very much depends on the stability that emanates from consistent economic policy and the perception of that policy's effectiveness. Mainland powers know this only too well. It is sufficient reason for their firm declarations where the yuan renminbi is concerned. It also only follows that people who know this would regard an outright de-valuation of the yuan as a critical fraying in the fabric of current Beijing policiy...a threat to reunification... and the possibility of an unkind reaction from the PLA. The United States, if not at first, is now fully aware of these issues and can not help but attempt to guarantee a positive direction for the PRC economy. The U.S. and its G-7 partners also see the probability that economic growth within the PRC, and their participation in it, will aid in filling corporate "bottom lines" in economies nearing full maturity. The same economies that also display evidence of dwindling alternatives for revenue growth in some of their key industrial sectors. Good night.