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To: Harvey Rosenkrantz who wrote (8413)	2/11/1998 12:42:00 PM
From: Shi	Read Replies (2) \| Respond to of 152472

Ramsey and Harvey, I talked to two China experts two days ago. The information you got is correct: China suddenly found itself soft-landed too much (almost deflation), and is now realizing the asian domino effect, and trying to stimulate domestic demands. For example, they are encouraging ordinary folks to buy houses/apartments. In almost every sector of industry, there is over-capacity. Bad loans stand at 22%. But two experts thought China had a good chance of weathering the storm without devaluation. Because China's problem is fundamentally different from that of Korea's. Korean companies borrowed too much short-term debt and are in a cash crunch. Most of China's foreign debt are long-term. Bad loan had always been high, so as long as it gets cleaned up gradually, it should pose a fatal problem. And China's authoritory regime is ready to deal with any riots resulting from high unemployment (I had that first-hand experience). Besides, if China dives, Hong Kong will drown, and foreign capital will fly away in no time. They also think the devaluation of SEA currencies isn't as much as a threat to China's export as people may expect. Because China has a good track record of stability and reliable labor force. Do people really want to set up a shop in Indonesia to save some money but risk riots and turmoil? Overall, they expected the growth rate to slow down to below 5% from 8%. They also expected Korea to recover first, and Indonesia to be in the deepest trouble. Shi