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

To: WONG who wrote (1696)	5/26/1998 4:11:00 PM
From: MikeM54321	Read Replies (1) \| Respond to of 2951

I spent the last hour reading (at the gym, on a treadmill, so I read slowly!) an article in the latest copy of the Atlantic Monthly June 1998 issue. The article is titled, "The Social Contradictions of Japanese Capitalism." It was an excellent article and well worth reading. From it you can get a glimpse of how the entire Asian crisis was intertwined and how it has unraveled. Japan played an integral role in the crisis. It was interesting because the author believes that the devaluation of the Chinese currency in 1994, by a whooping 33%, was the catalyst to start the current crisis. It's a little complicated, but makes perfectly good sense. Briefly, Japan was forced to look for cheap labor when they were on fire exporting to the US in the 1980's. Because they were so successful exporting, their yen went from 360Y=1USD to 80Y=1USD! So they needed to cut costs. Well they went around to a bunch of the Tigers and loaned them money to build them cheap parts. These cheap parts were sent back to Japan, Japan then could incorporate them into their products, and sell back to US at a competitive price in spite of the yen's strength. Well everything was fine and dandy, until the "motherland of all sweatshops," China, devalued! That's when the artificially pumped up, debt ridden Asian Tigers were forced to slow down, and couldn't pay back loans. The rest is history. Of course there is lot's more in the article, but the above is what related directly to China. MikeM(From Florida) PS Wong, thanks for the post.

To: WONG who wrote (1696)	5/26/1998 9:46:00 PM
From: Stitch	Read Replies (1) \| Respond to of 2951

Wong, <<China's finance minister said Tuesday that Asia's financial crisis had put great pressure on China's economy, but he assured Washington that Beijing would not devalue its currency. >> And, in so doing, China earns an enormous increase in influence in the world economic theatre. IMO this, most assuredly, will put China squarely in the WTO. One has to wonder what card Japan will play in all this? They must realize that their influence in SE Asia is dwindling. And what of increasing trade imbalances in the U.S.? I suspect it is only a matter of time before Congress starts an uproar. This, will undoubtedly give further approbation to China's policies and at the expense to Japan. Is there a shift in global line up beginning here? One is encouraged by all this to watch closely the upcoming visit to China by Clinton and wonder what new initiatives may result. But we must also recognize Japan's wherewithal to regain an important role in the recovery process if there is to be one. Here is a post Mike offered on the Asia Forum thread, presumably from the same article he has just mentioned here. exchange2000.com It seems to me that Japan and China both together may hold matching keys to the unraveling of the SE Asia economic crisis. China, turning their eyes inward to infrastructure and social programs to support growth opening the export path for the tiger countrys. Japan, if ever they move decisively on tax reform and market reform, to spur consumption thus opening markets for the tigers and avoiding an increase to the huge trade imbalance with the U.S. Caution: all of the above are just the ramblings of an overworked ex-pat with no particular claim to any knowledge about the subject. Best, Stitch