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

To: MikeM54321 who wrote (1649)	5/20/1998 11:50:00 AM
From: Ron Bower	Read Replies (2) \| Respond to of 2951

Mike, I've been reading the postings about a devaluation of the Rmb and don't understand the reasoning. If China wants to be more competitive, they can lower wages, lower prices, provide tax incentives, provide free facilities, etc. We aren't talking about a country where 'rights' conflict with the will of the government. If they devalue, they might sell more quantity, but would they realize more in real dollars (now considered $US)? This mistakingly presumes that the currency of Asian competitors would not devalue. The devaluation would increase the costs of imports in the real dollars and cause internal inflation. They badly need an export surplus. Where is the plus side of a devaluation? I just can't see any benefit for China. IMO they will try anything and everything they can to improve the competitiveness of their exporting industries and devaluation of the Rmb would be tried only after they had exhausted all other options. It would also signify the bankruptcy of SE Asia. JMHO, Ron