Re: A step forward

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Monday April 1, 4:03 am Eastern Time

Reuters
ANALYSIS-China Sticks to Yuan Policy but Ponders Options

By Edwin Chan

SHANGHAI (Reuters) - China will keep its iron grip on the yuan during its
freshman year in the WTO
despite more volatility in external trade, loathe to widen the yuan's thin
band out of fear of upsetting Asian
neighbors, analysts said.

Although central bank chief Dai Xianglong said last week China was studying
an IMF proposal to peg the yuan to a  currency basket of its major trade
partners, analysts said that was a long-term consideration and the yuan
would remain  shackled for now.

 ``China's neighbors have their eyes glued to the yuan's trend.   To talk
about nudging the yuan lower right now would be  highly sensitive,'' said Li
Yushi, a research economist with the  powerful State Economic and Trade
Commission's (SETC)  International Trade and Economic Cooperation Institute.

 China's top priority is to keep its currency as stable as it can during
what promises to be a turbulent teething period in the World Trade
Organization, and ahead of a top Chinese leadership reshuffle late this
year, experts said.

The launch of euro-yuan trade on Monday was aimed at facilitating trade and
was not a sign of more
flexibility, they said.

The volatility in the Japanese yen also underscores the need for China to
keep its forex policy steady,
analysts said.

The yen (JPY=) dipped to a three-year low of 135.20 in January, sparking
concern around the region that
China would devalue the yuan currency. Japan is China's top trade partner.

Neighbors worried the yuan's (CNY=CFXS) wafer-thin range of 8.2760 to 8.2800
to the dollar may
disintegrate if the yen heads further south, forcing Asian economies to
devalue in return.

``We believe you'd have to see dollar/yen north of 150 before a devaluation
of the yuan becomes a real
risk,'' said Ron Leven, Lehman Brothers' Asian currency strategist in Tokyo.

The yen was now hovering at about 133 against the dollar.

TURBULENT TIMES AHEAD

China is in a sensitive period ahead of a leadership changeover later this
year. President Jiang Zemin,
Premier Zhu Rongji and parliament chief Li Peng are due to relinquish their
Communist Party posts at a
key congress in September or October, and their government posts next March.

After winning kudos for adhering to its firm yuan policy during the Asia
financial crisis, Beijing is unlikely
to blindside the region now -- especially since it lifted domestic stability
to the top item on its agenda this
year, analysts said.

The yuan is susceptible to trade flows because it is fully convertible only
on the current account, meaning
it is mainly used for the purposes of buying and selling goods.

Although calls for more exchange rate flexibility to cope with WTO shocks
are rising, China is unlikely to
widen the yuan's trading band by much while it enacts a slew of painful
reforms and cleans up its tangled
financial system, economists said.

``They're entering the WTO, that means there's going to be a massive
increase in foreign competition with
Chinese goods,'' said Marshall Gittler, head of Asian currencies for Bank of
America.

``You're bound to have a massive rise in unemployment as peasants get hit
with international competition.
It's destabilizing to the government.''

China has no immediate need of a devaluation, analysts said. Exports are
starting to recover from last
year's slump and foreign direct investment is pouring in as WTO gradually
opens more sectors to foreign
investors, they said.

However, Dai's comments on the currency basket reflect China's desire to
wean the yuan away from the
dollar and seek a longer term option for coping with yen swings, analysts
said.

``This (currency basket) was something that's still long-term without any
kind of sense of what long-term
means. It didn't cause us to change any of our views on China,'' said Leven.

EGGS IN MANY BASKETS

A currency basket would offer China an alternative to devaluing to mitigate
yen volatility and its impact
on China-Japan trade and investment flows.

Under the system, the central bank would widen the yuan's trade range -- now
just 0.02 percent up or
down -- around a reference rate based on the currencies of major trading
partners.

``Under a basket peg, the renminbi (yuan) can move more against the dollar,
but less against other major
currencies,'' Nomura International economist Pu Yonghao wrote in a research
note.

``As such, a basket peg would enable the renminbi to absorb significant
volatility among the other
currencies, for example the yen's significant fall.''

China has signaled wariness of being overdependent on the dollar. Finance
Minister Xiang Huaicheng has
proposed raising the level of euros in its $220 billion foreign reserves,
saying China would prefer not to
``keep all its eggs in one basket.''

Full convertibility remains the ultimate target as China struggles to
integrate with the global economy,
although analysts say that is at least five years away.

``China has to deal with a lot of problems. All these problems can't be
solved in one or two years,'' said
Lin Wei, Capital International's economist in Shanghai.

Some analysts said China may use Hong Kong as a testing ground for
convertibility by first allowing Hong
Kong banks to take yuan-denominated assets. Dai said in February China would
consider letting Hong
Kong banks accept yuan deposits.


"Henry C.K. Liu" wrote:

> Although the Chinese RMB yuan is pegged to the dollar at 8.2 to 1, its
> (and the dollar's) floating exchange value to the yen is of critical
> importance to both economies.  In 1998, when the yen fell to 147 against
> the dollar, Beijing served notice that a yen below 148 would force the
> RMB yuan to devalue against the dollar.  Tokyo and Washiongton took
> steps to reversee the fall of the yen.  Washington had put forth the
> notion that the Asian financial crisis of 1997 was precipitated by
> Chinese devaluation of the RMB yuan from 5 to 8.2 two years earlier.
> China has since received praise from Washington for resisting devaluing
> the yuan all through the Asian financial crisis that began on July 2,
> 1997.  Market forces since 1999 have been putting pressure on the yuan
> to appreciate aginst other currencies, reflecting China's robust
> economy.
>
> In 1996, about $100 billion flowed into East Asia, but in 1997, $150
> billion flowed out in three months after July. Even though the
> Washington Consensus argued that domestic policies had caused the
> crisis, Asian governments have been looking to regional financial
> arrangements to protect themselves from similar volatility in the
> future. The most visible cause for the crisis was the fixed exchange
> rate regimes adopted by Asian governments through the 1990s, all pegged
> to the dollar at rates at odds with economic realities.  The fixed
> exchange rates had to be defended by the central banks' foreign reserves
> earned from trade surpluses.  As speculative attacks gathered force
> against Asian currencies, several central banks found themseves drained
> of foreign reserves on short order, forcing them to abandon the fixed
> exchange rates. As local currencies devalued, it became impossible for
> local currency revenue to service short term dollar debts, causing
> defaults and bankruptcies and general economic collapse.
>
> To withstand the full fury of money market forces, it has been argued
> that domestic policies have to reform in areas such as flexible exchange
> rates, corporate governance, capital market deepening and increased
> market discipline. The World Bank and the IMF have jointly prepared
> Reports on Standards and Codes (ROSCs) to rate countries in eight
> dimensions: statistical data dissemination, fiscal discipline,
> supervision (of banks, NBFIs, and securities markets), transparency in
> monetary and fiscal policies,
> payments settlements, corporate governances, accounting and auditing
> standards, and insolvency and creditor rights.  Yet, unless an
> economically honest, or at least responsive, exchange rate regime is
> operative globally, such reforms cannot happen locally. On some of the
> eight dimensions, notably corporate governance and accounting and
> auditing standards, the US is the leader of questionable practice.  Yet
> the dollar was exempt from attacks, speculative or fundamental.
>
> The rapid pace of globalization has brought forth the need for a Global
> Central Bank as lender of last resort, regulatory authority, global
> rules and standards, etc. But the reality is that this is not likely for
> the forseeable future because governments are reluctant to surrender
> national soveriegnty in the protection of national economic interest.
> What then is the option facing individual governments? Already, the
> formation of the EU, NAFTA, MERCOSUR and other regional groupings
> demonstrate that other regions are moving ahead with regional
> arrangements. East Asia has lagged behind. The many market failures in
> the global financial regime markets - panics and herd behavior, are well
> documented. Instead of dealing with the real problem, the international
> creditor community responds with IMF-type pressure.  Not only will this
> approach not solve the financial pressures on emerging market economies,
> it is also unfair, bercuase it imposes on these economies austerity
> measures they did not deserve, or worse, serves no constructive purpose,
> except to perpetuate dollar hegemony. Of course, countries need banking,
> accounting, and regulatory standards, but there is no agreed best
> universal practice. Even the G-7 cannot agree among themselves on a
> common standard. Even after Enron and telecom IRU swaps controversies,
> the US continues to resist regulation in favor of market discipline. Yet
> under pressure from the IMF, developing countries are being forced to do
> what the US rejects for itself . In reaction, East Asian countries have
> gotten together to discuss this issue and to arrive at their own common
> standards. East Asia is quite capable of becoming a common currency
> area.
>
> The most important changes to the world's financial architecture are
> likely to come from the new regional
> arrangements being realized in East Asia by Japan, China, South Korea,
> and the ten member countries of
> ASEAN. The idea of a multilateral cooperation agreement was revived on
> May 6, 2000, when the finance ministers of the ASEAN+3 countries met in
> Chiang Mai, Thailand, and concluded an agreement called the "Chiang Mai
> Initiative" (CMI).
>
> The CMI was the first and significant step in official financial
> cooperation for the whole region, better enabling the region to cope
> with potentially disruptive currency fluctuations and international
> capital movements, so that the countries within the region can protect
> themselves from volatile and unpredictable capital movements. As a
> follow up on the CMI, an ASEAN Central Banks Forum took place recently
> in Brunei and Kuala Lumpur. The 10 monetary authorities of ASEAN then
> agreed to expand the size of
> the multilateral currency swap facility among the member countries from
> US$ 200 million to US$ 1 trillion. It should be reported that the
> uniform framework of bilateral swap agreements between the 3 North East
> Asian countries and ASEAN was debated by the 10 + 3 leaders in their
> Singapore Meeting in November 2000 and Kuala Lumpur Meeting in April
> 2001. And in Honolulu, exactly one year after the CMI was announced,
> three bilateral currency swaps agreements between South Korea and Japan,
> Malaysia and Japan and Thailand and Japan amounting to additional $6
> billion have already been signed.
>
> The Chiang Mai initiative, which is a bilateral swap arrangement among
> 13 countries -- achieved much more than expected. With monitoring and
> surveillance, it can be the beginning of an Asian Monetary Fund. The
> arrangement has already been in existence for a year and particpating
> countries are working together on the regulatory arrangements.
>
> The proposal of an Asian Monetary Fund initially received a cool
> response from the IMF and G-7, led by Washington, but their position has
> softened since. IMF Managing Director Kohler said that an Asian Monetary
> Fund would be acceptable if it were complementary to the IMF, and this
> has been echoed by the G-7 and ASEM. Monetary cooperation in East Asia
> has progressed at an encouraging pace. Examples of such cooperation
> include the work toward the Asian Monetary Fund, Manila Framework Group,
> ASEAN surveillance process, ASEAN+3 surveillance process, Chiang Mai
> initiative, bilateral arrangements, short-term capital flows monitoring
> by the ASEAN secretariat, ASEAN+3 early warning system, Third ASEM
> finance ministers meeting, and the Kobe Research Project.
>
> Structural reforms while necessary is not enough.  There is a need for a
> safety net through a regional financial arrangement. Asia needs an Asian
> system, operated by Asia and for Asia.
>
> Exchange rate stability and monetary coordination are legitimate
> regional multilateral concerns. Capital markets nowadays are global but
> market power is not equally distributed. A regional financial
> arrangement to deal with its implications then becomes necessary. US and
> European standards are converging rapidly. The Basle Capital Accord is
> becoming more inclusive and East Asian countries are participating. Yet
> there is evidence that the Japanese banks' problems are caused largely
> by the "international" standards of capital requirments that do not fit
> Japanese historical conditions well. While it may make sense to pool
> risks at the global level, it makes even more sense to pool them at the
> regional level because international standards may not be sensitive to
> regional conditions.
>
> Sakakibara Eisuke, former Japanese vice finance minister for
> international affairs, is an inititaor of an Asian monetary scheme. It
> has a distinct Japanese provenance - even though Finance Minister
> Miyazawa Kiichi denies any link between the current plan and one bearing
> his name that emanated from Tokyo in 1997. Washington vetoed that
> proposal during an IMF meeting in Hong kong, which called on the Asian
> Development Bank to support Asian currencies that came under speculative
> attack with a special $100 billion fund.
>
> The signatory goverments of CMI agreed to contribute $40 million each to
> a common fund. The money will be used to allow them to swap each other's
> currencies and run a system to spot threatening moves in currency
> markets. Still to be resolved are the details of the "swap" mechanism,
> and exchange rates. The plan is to build up a $20-billion war chest (an
> amount proposed by Sakakibara). The AMF won't replace the IMF, but it
> could be a quick-reaction force to avert disaster while the IMF
> deliberates on global implications.
>
> Bilateral relationship between an emerging East Asian economy and the
> lead global economic power was historically the strategy for a regional
> economy to achieve growth. This phenomenon, which brought economic
> growth in tandem with interregional relationship that lacked sufficient
> diversification, rendered the economies of the region susceptible to
> severe and excessive external shocks. Most major East Asian economies
> depended on extra-regional trade and investment, while intra-regional
> financial flows were relatively light. Sudden and simultaneous capital
> flights by extra-regional investors and creditors left the region
> devastated in 1997. The concentration of foreign currency-denominated
> external loans was an economic disaster to the countries in the region,
> because practically all of them were short of foreign exchange for
> external debt repayment when the financial crisis erupted in 1997. When
> local currency depreciation precipitated a loss of confidence on the
> part of foreign investors and creditors, short-term external loans were
> recalled and massive capital flights followed. Many Asian countries were
> caught short of foreign currency assets, and external debt repayment
> difficulty mounted overnight.
>
> Currency speculation that contributed to the triggering of a process
> that led to the economic collapses of several countries in Asia was a
> clear proof of the lack of effective, cohesive cooperation in the
> region. The only option remaining at the time was to turn for assistance
> to stronger economies and international financial institutions whose
> interest were not closely aligned with those of the region. In order to
> prevent international currency speculation, it is essential that any
> preventive financing be arranged in large amounts and very quickly. Hong
> Kong with its huge dollar reserves, was able to withstand speculative
> attacks, albeit at high cost. What is even more important therefore is
> the sheer availability of a sufficiently large financing facility
> standing ready to assist. Such readily available financing can serve as
> an effective, preventive mechanism against the possibility of a balance
> of payments difficulty. International organizations, that endeavor to
> provide assistance financing globally are already spreading their
> resources too thin. China and Hong Kong each provided the IMF with $1
> billion in July 1997, with the understanding that the IMF would contain
> the crisis within Thailand. Instead, the IMF exploited the crisis to
> promote dollar based global market fundamentalism.  The East Asian
> region therefore must accept the fact that it has to rely on itself more
> than on outside help alone.
>
> Unlike many of the cases in Latin America, it can be argued that the
> balance of payments problems of
> 1997-1998 in Asia were not fundamental but transitory in nature. They
> were in fact due to unforeseen and sudden capital outflows. Moreover,
> the crisis could have been a mere temporary setback had it not been
> further aggravated by restrictive IMF policy stances taken in the
> earlier days after the crisis. The Malaysian temporary financial
> derailing, may provide a case in point and swift deinternationalization
> of its currency worked. For the most part, the Asian financial crisis
> was thus more of the capital account-related nature than that of the
> traditional current account disequilibrium.
>
> Following the 1997 economic crisis, Asian countries began to look inward
> within the region. The concept of self-reliance and mutual support,
> lying dormant for so long under the domination of globalization, has
> been revived. Although regional trade cooperation in Asia has been
> continuously strengthened via economic consolidation, cooperation in
> financial areas still leaves much to be desired. Financial illiquidity
> of Asian countries during and immediately following the crisis provides
> sufficient evidence to prove the point. Hong Kong suffered for its
> market liquidity rather than fundamental weakness.  Regional investor
> sold in Hong Kong to try to save their investments in other illiquid
> parts of the region.  The 1997 financial crisis of Asia necessitated
> international financial adjustments in the crisis-hit countries. Japan,
> China, Hong Kong and other Asian countries were ready to help, despite
> their own domestic problems, but was prevented from doing so by
> Washington.  This brought about the awareness of need for greatly
> enhanced intra-regional trade and finance and led ultimately to some
> form of coordinated, intraregional, financial policy framework and
> shared financial resources, something close to a new international
> financial architecture for Asia.
>
> In order to strengthen self-help and support mechanisms in East Asia
> through the ASEAN+3
> framework, the need to establish a Regional Financing Arrangement (RFA)
> to complement the existing
> international facilities is recognized. The CMI multilateral and
> bilateral swap facilities that are put in place among the 10 + 3
> monetary authorities will be utilized only when one or some countries
> encounter short-term and temporary balance of payments difficulties.  In
> the framework of the RFA, the emphasis is placed on the role of the
> regional currencies. This is a major theme in the arrangement. The lack
> of
> currency diversification in the past led to detrimental effects
> associated with external payments difficulties. The multi-currency
> placement mechanism is thus designed in an attempt to reflect this
> diversification objective. Based on the amount of total out-placements,
> each country can then borrow up to a multiple of the placement amount, a
> concept similar to the much practiced margin loans in the securities
> business. A formula to determine each country's multiple would be
> developed and negotiated, perhaps on the need to borrow and ability to
> repay basis. Once the multiples are agreed upon, each of the monetary
> authorities can utilize the multilateral and bilateral swap facilities
> up to the maximum amount as determined by the respective multiples. The
> RFA also introduces a new element in regional financial cooperation, one
> of building up a formal and committed relationship among the
> participating member countries from day one onwards, prior to any
> borrowing actually taking place. The system so envisaged will in effect
> become a mutual give and take, which forms a fair and logical foundation
> for financial self-help and support
> among monetary authorities of the East Asian countries.
>
> The countries within the region need to be protected against serious
> balance of payments and international
> liquidity problems. The financing facility required for the purpose must
> be accompanied by proper monitoring of capital flows and an efficient
> regional surveillance process. The resulting regional financing
> arrangement (RFA) will then constitute an important element in East
> Asia's self-help and support mechanisms. The development and
> implementation of the RFA must therefore be expedited with binding
> commitment by the regional member countries.
>
> The implementation of the ASEAN Swap Arrangement (ASA) and some one-way
> bilateral swaps
> agreements between Japan and the three countries have been finalized
> thereby completing the first building block of the East Asian financial
> cooperation. By the end of the year 2001, comprehensive research have
> been done on the subject of capital movement monitoring within the
> framework of ASEAN+3. By June 2002, Two-Way Bilateral Swap Arrangements
> (TBSA), or arrangements whereby China, Japan, and South Korea can
> financially assist one another in a reciprocal manner in times of
> similar needs, should also have been instituted. The second building
> block in the framework of ASEAN+3 financial cooperation will have then
> been completed.
>
> Then the third building block of mutual placements will be completed
> among the 13 regional countries as
> the foundation of the RFA scheme by year-end 2002 at the latest, by
> which time obstacles to the regional
> financing arrangement will also have been eliminated or minimized. In
> order to get the new RFA scheme off the ground rapidly, concrete
> operations can conceivably begin to proceed step by step as early as
> possible. Each of the ASEAN+3 countries that is willing and
> well-prepared enough might begin by making some bilateral agreements
> within the framework of this scheme and then keep on expanding the
> number of new partners with which further agreements can be made. Once
> all the possible pairings of countries are achieved, full-scale
> "constructive engagement" of the multilateral RFA scheme will thereby
> have been completed and a full-fledge preventive scheme created and
> ready to be activated whenever called for by the events. The monitoring
> and surveillance unit for the ASEAN+3 countries will have built up its
> expertise and facilities such that it will stand ready, together with a
> final decision making body well institutionalized to deliberate on
> recommendations tabled by the monitoring and surveillance unit upon
> regional member countries' requests for drawdowns of assistance funds,
> by mid-2003. Within a decade pursuant to the time when the
> multi-currency placements will have been made, regional financial
> cooperation and institutionalization will have grown to a point where a
> common currency area will become a viable and realistic option for East
> Asia.
>
> In the near future, the Finance Ministers and Central Bank Governors of
> the 10+3 East Asian countries will have the final say as to what would
> be the modalities, sizes, mechanisms, operating procedures,
> rules, and regulations of East Asia's RFA. Whatever and whenever they
> finally decide upon as a logical follow-up to the CMI, East Asia will
> move another step closer to the ultimate goal of intraregional
> cooperation and integration to stabilize the foreign exchange markets
> and macro financial systems of the member countries.
>
> This newly proposed RFA scheme would aim at eventually becoming
> complementary to existing international facilities in terms of the
> out-placements made upfront as well as the timeframe involved in the
> operations; it would have sufficient size; and it would allow certain
> ASEAN member countries to benefit from the financing from the North East
> Asian countries, which they otherwise might not be able to gain access
> to under a bilateral framework. There is also the question of moral
> hazard, whereby a country realizing that there is emergency rescue
> funding available might become less cautious with its macroeconomic
> policy management, particularly as related to the balance of payments. A
> crisis to be avoided would therefore be inadvertently made to happen. To
> avert the problem of moral hazard,
> the scheme as proposed must be accompanied by an effective and efficient
> system of surveillance, self-
> monitoring, peer review, and final decision making capability.
>
> China views the Chiang Mai Initiative as a substantial step toward
> financial cooperation among East Asian countries. The objective is to
> complement existing current international facilities ---- by providing
> liquidity
> support for the nations in the difficulty of international payment.
> According to article 7 of the CMI, 10+3 finance ministers also mandated
> ASEAN secretariat, on top of currency swap agreement, to work on
> appropriate self-financing vehicle for the region with a view to
> strengthening the collective capacity against possible future financial
> crisis.
>
> East Asia Cooperation has a strong political commitment, thereby
> creating a solid foundation and impetus for further development.  In the
> face of the difficulties posed by 1997 Financial Crisis, the leaders of
> Asian Countries have realized that it is imperative for them ----
> through coordination and cooperation---- to strengthen collective
> capability against crises so as to recover their economies as quickly as
> possible. In this context, the leaders of ASEAN, China, Japan and Korea
> took advantage of the 30th anniversary of
> ASEAN to hold their first informal meeting in Malaysia in late 1997.
> Since then, leaders of ASEAN+3 met regularly and had in-depth
> discussions on the issues concerning regional finance, economy, politics
> and security etc. Specifically, they reached the consensus on the key
> role of financial stability in sustaining
> regional economic development. The leaders also shared the conviction
> that to build a peaceful environment for economic development serves the
> greatest common interest of East Asian countries. To this end, it is
> imperative for the East Asian countries to strengthen coordination and
> cooperation among
> themselves. In November 1999, leaders of 10+3 issued the Joint Statement
> of East Asia Cooperation in Manila, which crystallized the direction and
> priority for the future by highlighting the importance of developing
> economy through cooperation.
>
> In light of this principle, the concept of regional financing mechanism
> symbolized by the CMI has been moving forward steadily while the
> cooperation in trade and investment is making headway.
>
> The financial and economic cooperation under 10+3 framework has given a
> spur to  the progress in overall East Asian Cooperation. In November
> 2000, the fourth 10+3 informal leaders meeting in Singapore agreed to
> designate two task forces to study the possibility of transforming
> informal meeting to summit and establishing an ASEAN+ Northeast Asia
> Free Trade Zone. Moreover, the leaders of China, Korea and Japan agreed
> to meet regularly on the occasion of 10+3 leaders meeting since 2001.
>
> Given diversified background in history, culture and level of economic
> development, the East Asian countries must pursue regional cooperation
> in a gradual and orderly manner, taking into account their unique
> characteristics.   Compared with other regional cooperative mechanisms,
> particularly the
> European economic and monetary union, Asian nations are more diversified
> in history, culture, political regime, and levels of economic
> development. In recent centuries, Western imoperialism and colonialism
> have fragmented Asia.  the cold War further extended that
> fragmentation.  Therefore, there is still a long way to go and arduous
> task ahead for these nations. And they must choose a cooperative pattern
> suitable to the regional  characteristics rather than blindly copying
> the model of others.
>
> It is noteworthy that the evolution of ASEAN itself experienced several
> stages. It started with those countries of similar economic features,
> then was gradually expanded to more countries. Likewise, the current
> cooperation among the East Asian countries should also start from the
> areas where the consensus can be more easily reached, and then spread
> gradually on the basis of consolidation.  Contrast to other regional
> organizations that started from trade cooperation before their
> expansion, the East Asian Cooperation started from the financial field
> where they shared consensus before the comprehensive cooperative
> relations could be gradually established in the field of finance, trade
> and investment.
>
> The East Asian cooperation has emerged along with the vigorous momentum
> of regionalization in global economy, which is consistent with economic
> globalization. Globalization has two sides to the coin.
> While having accelerated world economic development, it has also brought
> about the problem of uneven distribution of benefits, thereby
> accentuating global economic polarization. As a result of dramatic
> advancement of modern information technology, the Digital Divide has
> further widened the income and
> development gap between the developed and developing countries. Many
> developing countries found themselves increasingly marginalized in the
> course of globalization.
>
> Developments in Asia do not always received asequate attention in the
> Western media.  This summary may serve to help correct the impression
> that Asia is merely an appendix of a Western global system.
>
> Henry C.K. Liu
>
> Kazuhiro Kurose wrote:
>
> > > Chinese Central bank chief Dai Xianglong yesterday said he
> > would
> > > "seriously consider" an International Monetary Fund
> > proposal to ditch
> > > the yuan link to the United States dollar in favour of a
> > link to a
> > > basket of currencies.
> > >
> > > Full convertibility and free float next.
> >
> > In FT's web site on March 28, I found the article that China
> > and Japan signed a yen-yuan swap agreement. What kind of
> > attitude China takes toward US as well as Asia is the very
> > critical to the world political economy in both political
> > and economic sense. China signed the agreement, as said in
> > the article, even though her capital account is not
> > convertible, which means that the yuan is not vulnerable to
> > speculative currency attacks. What is the implication on
> > these facts??
> >
> >  **************************************
> >   Kazuhiro Kurose
> >   Graduate School of Economics and Business
> >   Administration, Hokkaido University
> >   Kita 9 Nishi 7, Kita-Ku, Sapporo, Japan
> >   060-0809
> >     TEL: +81-11-716-2111 ex:2786
> >  **************************************