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Non-Tech : Beijing YanHua Petrochemical (BYH) Taking Off -- Ignore unavailable to you. Want to Upgrade?

To: Julius Wong who wrote (101)	2/7/1998 12:12:00 PM
From: Jim Lou	Read Replies (1) \| Respond to of 257

Julius, thanks for posting a nice article again. While there is much pressure on the Gov to depreciate the Yuan, I believe that they won't do it, for the following reasons: 1) As mentioned before, as soon as yuan gets depreciated, Asian currencies will be all tumble. Worst of all, China wouldn't be able to catch up the race downward. Therefore, China will rather continue to peg the yuan at the current rate rather than depreciate its value. I believe that Rubin's support to China's tough stand has its material dimensions, that is, the US will support China by maintaining trade figures. 2) Currency depreciation could cause threat to stability which the gov tries to protect at all costs. I called friends during the Spring Festival and learned that layoffs are pretty bad at this point in time. SOE's don't have enough contracts. The need for reforming SOE's is urgent. In this situation, any currency depreciation may hang the reform process and waste previous effort. 3) Currency depreciation may especially affect the "out of plan" (the private sector) economy which has a greater reliance on Western tech. And, believe it or not, China imports much of its grain from the US and Canada... All these are not in favor of the government. Given all these reasons and more, I believe that depreciation won't happen. However, here is one thing that bothers me somewhat: I read from People's Daily some time ago that oil products are over supplied. The government tended to put restriction on production of refineries. I hope this would not affect BYH much, because BYH does have many dimensions.