Re: China's Foreign Exchange Reserves

["Chris, London" <100423.2040@xxxxxxxxxxxxxx>]

Rahul, Thanks for picking this up. On your comments I would say


>>China is also in the not so powerful position of having a foreign debt of
over $90 billion (c. 1994).
<<

I do not see this as a sign of weakness. I posted earlier in this
month that external investors are still keen to invest in
China, despite China taking a more nationalist line than
previously on inward investment. It is the balance of inflows and
outflows, particularly of a medium and long term nature that matters.
China looks in a robust enough situation to ride out short term currency
movements which can be so massive, and to which so many countries are
in fear of. Her incredibly strong foreign exchange reserves speak
eloquently to the ears of Capital.

>>>
Tapes and CD's are "where it really matters." To get rich is glorious,
right? You don't honestly think China is going to lead some crusade to make
sure the people from the Third World can get medicine at a price they can
afford, do you?
<<<

No, tapes and CD's do not matter, though the ability to make CD's
in large volume to international standards is the sort of thing that does
matter, and probably China has learned to do this and can now enforce
anti-pirating legislation. What really matters is new technology for the
constant revolutionising of the means of production.

For example China was the first country in the world to synthesise insulin,
in the good old Maoist days of self-sufficiency. What will be really
interesting is the news when it comes, of its first deal in joint production
in China with a major western bio-technology company.

I think there is no doubt that in addition to volume of market size,
the government intends to go upmarket in terms of the means of production.

I do not think that necessarily means a crusade. I think it does mean,
if we study more morally neutrally what is going on in front of our
eyes, that the global power relations of the 21st century will be different
to the power relations of the 20th. It is unlikely to be the "American
Century" again.

Regards,

Chris



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