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

To: Tom who wrote (1621)	5/16/1998 6:28:00 AM
From: Tom	Respond to of 2951

Off Topic Discipline...in Lee Kuan Yew's view: Certain basics about human nature do not change. Man needs a certain moral sense of right and wrong. There is such a thing called evil, and it is not a result of being a victim of society. You are just an evil man, prone to do evil things, and you have to be stopped from doing them.

To: Tom who wrote (1621)	5/16/1998 8:13:00 AM
From: MikeM54321	Read Replies (2) \| Respond to of 2951

Tom or Stitch (or others), Tom, funny you should mention unemployment. Perfect time to bring up a couple of related topics. I generally agree with you and Stitch concerning your views on Hong Kong and China, but I am still concerned that there will be a vast population living in China and Hong Kong who won't understand. The two articles below are related to my topics. Topic One. Don't you think it will be inevitable there will be some local hot spots created by unhappy and unemployed workers? If so, don't you see another strong crackdown coming? I just don't see how China is going to escape economic damage when all the Asian Tigers are falling around them. It will eventually hit China hard. I can't see the government letting it get out of hand. Remember Tiannamen Square(I have no opinion on T.S. but use it only as example). Topic Two. Plus, the Chinese government is working very hard trying to keep the currency from falling. At some point in time, won't it be to their benefit to let it fall a little. Afterall, it must take a lot of their reserves to keep propping it up each time it is attacked. So aren't they going to start worrying that their reserves are going to be spent on a depreciating asset and then let it fall? If it falls a little, doesn't this help the unemployment situation making China more competitive with it's neighbors who have let their currencies weaken. Looking forward to your comments. MikeM(From Florida) Topic One: >>Jiang Raises Plight of Laid-off Workers BEIJING - Chinese President Jiang Zemin has said rising unemployment is an urgent political problem but defended job cuts as necessary to reinvigorate the state sector, the People's Daily said Friday. In the latest sign of mounting official concern over rising unemployment, Jiang also called on the country to help find jobs for laid-off state workers. "This is not only an economic issue, but also a political one," the newspaper quoted Jiang as telling a national conference on the plight of workers laid off from state firms. "Not only is it a problem of real urgency, but it is also one of long-term strategic significance," the Communist Party mouthpiece quoted Jiang as saying. State enterprises, struggling with the legacy of cradle-to-grave welfare for employees under central planning, are shedding millions of workers to try to stem their losses. Firms plan to lay off 3.5 million workers this year alone. They will add to an existing army of unemployed officially put at 11.5 million, but unofficially much higher. The weight of hordes of unemployed have stretched China's social fabric thin in some places, with laid-off workers taking to the streets in protest or turning to shady investment schemes or even crime. A ban imposed last month on direct selling sparked rioting and looting that left about 10 people dead and more than 100 injured in two cities in central Hunan province. Many people employed by direct sales firms were laid-off workers. Tens of thousands of staff were left holding over-priced goods which they bought with their life savings and which they now cannot sell. Worker unrest is one of the biggest fears of China's rulers.<< Topic Two: >>Fears of HK Currency Attack Grow as Economy Shrink HONG KONG, May 13 - Growing worries that Hong Kong may suffer minimal or even negative growth this year have raised fears that speculators might take advantage of the weakened economy to launch another assault on the currency. ''We are seeing some institutions talking about negative growth in Hong Kong as opposed to a growth recession, so the market is starting to think Hong Kong is more vulnerable,'' said Steve Gilbert, Regional Treasurer at CoreStates Bank. ''And if Hong Kong couldn't stand interest rates being raised to defend the peg six months ago, then it is certainly more vulnerable now and I think speculators may try to have another crack at the peg,'' he said. Persistent worries that China might devalue its currency to remain competitive, despite Beijing's persistent vows that it will not, also has put pressure on the Hong Kong dollar, as has escalating violence in Indonesia. Hong Kong money market dealers said that over the past several weeks overseas hedge funds had accumulated long U.S. dollar positions in the forward market, raising concerns they might launch another salvo against the Hong Kong dollar. The Hong Kong dollar has been linked to the U.S. dollar since 1983 and is allowed to float in a narrow band around HK$7.8 per US$1. It was trading at HK$7.7465/75 on Wednesday. The rate is maintained through a currency board system so pressures for a weak Hong Kong dollar automatically cause interest rates to rise, and vice versa. Hong Kong's overnight rate soared to 300 percent in October last year in response to an attack on the dollar. Rates quickly dropped from those lofty levels but have stayed high enough to cause pain to Hong Kong's financial markets and real economy. The Hong Kong government has resolutely maintained its 1998 growth forecast of 3.5 percent announced with its budget in February, but most other outlooks have been less optimistic. The International Monetary Fund has projected a growth rate of 3.0 percent, while the Organisation for Economic Cooperation and Development has predicted a 0.9 percent advance. Investment bank Lehman Brothers has been forecasting a scant 0.5 percent growth rate for Hong Kong for months, while other houses recently have cut their forecasts to slightly negative. Steven Xu, Regional Treasury Economist at Standard Chartered Bank, said it was not surprising that local markets have been jittery, given the weakness of the Hong Kong economy. ''With the economy in such a sorry state of affairs, some people are going to be more vocal as to whether it is worthwhile to keep the Hong Kong dollar peg,'' Xu said.<<

To: Tom who wrote (1621)	5/16/1998 12:29:00 PM
From: Stitch	Read Replies (1) \| Respond to of 2951

Tom, Thank you for such a thought provoking commentary. <<I was thinking only yesterday about the fact that the bulk of the unemployment is yet to come.>> I read recently that China has dismantled slightly over half of the state enterprises, with a high unemployment rate as a result of course. The rest will only add to the problem. Unfortunately China has not instituted much in the way of retraining programs which I suspect are high on Mr. Zhu's list. <<Central to that plan would be the consolidation of the strength they feel is in the coastal industrial region.>> A review of the history of the South China coast makes it all the more fascinating to realize just how important this region is to China's future and why, after hundreds of years of Mandarin disdain, it is regarded by the current "Mandarins" as the jewel in the crown. It was to this area the merchant class who suffered so greatly under the mandarins escaped to. It is from here that, from Canton to Shanghai, the enormous off shore Chinese migration was launched to the effect of the accumulation of enormous wealth and power. That this region now represents the best of the economic hopes of China is not at all surprising. It is embodied in the region's history since long before the Western world was little more then a few barbaric tribes fueding with each other and long before Socratic thought was, well,..thought. <<The Eastern Coastal Region should also function as a shoving-off point, a financial fulcrum for lifting the remainder of the country.>> If you let your eyes rest on Seoul on a map, then guide them almost due West to a small peninsula jutting down from the China mainland, you will see a place called Dalien. Here a huge port has been built as has tremendous industrial infrastructure. It will be a showcase city, with parks, schools, hospitals, and a university. It will feature the latest in telecommunications, power distribution, automation for the port, and an airport. The result so far is very impressive and the plans are aggressive. Dalien will be the Eastern jewel in China's modernization. <<Additional insight also to why, after a number of years in the making, Singapore decided only recently they will be happy to host the U.S. Navy's Seventh Fleet.>> Perhaps so, but I think Singapore has been also prompted by the extreme rise in piracy incidents (cases thus far in 1998 are almost equal to all of last year in the South China Seas) as well as regional political instability. BTW, speaking of Singapore it was reported that Lee Kuan Yew, commenting on Zhu, said "he is not a man you like or dislike, he is a man you respect or do not respect, I for one respect him". An interesting comment from another crafty old Chinaman. Best, Stitch