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

To: Tom who wrote (1905)	6/17/1998 8:41:00 AM
From: WONG	Read Replies (3) \| Respond to of 2951

China MIGHT consider devalue.... June 17, 1998: 7:56 a.m. ET BEIJING (Reuters) - China might be forced to consider a devaluation of the yuan if the sliding Japanese yen led to a plunge in Chinese exports, vice-minister of trade Sun Zhenyu said on Wednesday. "If the change in the exchange rate puts large pressure on foreign trade and exports, or if there is a large fall in foreign trade and exports, then I am afraid we may have to consider the question of whether to make adjustments," Sun said in response to a question about how far the yen would have to plunge before China would feel the need to devalue its own currency. "Until now, the Chinese government is still firm on not devaluing the yuan," Sun said. "But if the Japanese yen continues to depreciate, this would put increasing pressure on China." He said Chinese exports of textiles, food and industrial products had been hurt particularly badly. "Japan is our largest export market, our largest trading partner, that's why the Japanese yen's large-scale depreciation has had major negative effects on Chinese exports," he said. It was the first time a senior Chinese official had commented openly and in specific terms about the possibility of currency devaluation. On Tuesday, finance minister Xiang Huaicheng warned that the yuan could be undermined if China missed its 8.0 percent growth target this year. "Whether or not the economic growth target can be realized not only will affect China's already extremely serious unemployment situation and increase pressure on the stability of the renminbi (yuan), but it will also affect state enterprise reform," Xiang said in an article published in the People's Daily. A devaluation of the yuan would be likely to kick away the peg that links the Hong Kong dollar to the U.S. dollar and possibly set off a vicious new round of currency devaluation throughout Asia.