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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: don pagach who wrote (8172)	2/28/1999 1:40:00 PM
From: Ramsey Su	Read Replies (5) \| Respond to of 9980

Don, the NY Times article is too narrowly focused. There is no real definition of the Chinese form of government today, especially in pertinence to their financial structure. By that I mean they have all kinds of fiscal and monetary policies available to them, not just devaluation of the currency or whatever. I am not saying they are necessary sound policies, just that they are available and much more so than our system. Devaluating or supporting the RMB is largely a symbolic move. As an example, China can lower interest rates, lower taxes, create special incentive districts, lower export duties, eliminate red tape, all of which could make Chinese products more competitive without devaluating the RMB. All can be done over night if Jiangzi Meng or Zhu say so. Besides, they could be devaluating the RMB right now by turning up the printing press and the world wouldn't know. I was told via private message that the exchange rate is already 10 yuan to the US$1, as far as trade and business are concerned. We are all in agreement that the 8% GDP growth last year was bogus. The 7% or so target this year is also a meaningless number, having no doubt that they will meet this target because the 1999 year end reports have already been printed, just waiting for release by the end of the year. Asia is in a huge catch-22 trap right now. Most would agree that Asian economies will not recover without the leadership of Japan. It is difficult for Japan to recover without reflation, most likely resulting in a weaker yen. A weaker yen could trigger a new round of deflation, starting in S Korea, rippling through China and beyond. Second only to Japan, an Asian recovery must rely on China. The NY Times article is absolutely correct in stating the difficulties facing China today, from the itics to massive unemployment. How long will Zhu Rhongji's honeymoon period last? We all know US foreign policy is based on "basher of the year" strategy. Why China is chosen again this year is puzzling? Is the intent to drive China down as the same path as the former USSR? I doubted if the current Chinese regime can be suckered the same way Gorbachev did. Did we not learn how naive our ideas are and how totally inapplicable to countries like China? Do we really want to send 1.2 billion Chinese down the same path as the Russians and the former soviet block countries? I don't think Wall Street is paying much attention to this Asia time bomb right now. In fact, the consensus may even be that Asian contagion is over. I opine that Asian Contagion II is right around the corner. A few wrong moves and all hell will break lose. I think sell-any-rally is therefore a much better strategy than buy-on-dips this year. In addition, also keep a few index puts handy for that rainy day. Ramsey