On Sat, 17 Jan 1998, Rob Schaap wrote:
> -Also, I think Dennis once said China's economy is still a
> disproportionately small generator of exchange anyway.
> -I now take him to be also saying that a high interest rate strategy is
> dangerously inhibitive for domestic business.
Yes, this is the gist of it. China's GDP is growing fast, but is only the
size of Spain, and its currency is not freely convertible (meaning, the
state has a lot more leverage over would-be speculators than in other,
more neo-colonized SE Asian countries). I should also have mentioned that
even though HK is a financial/services metropole, the foundation for
this is mainland industry. So those high interest rates are, over the long
term, unsustainable. This doesn't mean Hong Kong is going to go bankrupt
any time soon, only that a devaluation is likely -- if, for no other
reason, than as a way of keeping HK/Chinese businesses competitive with
other, newly cheapened SE Asian exporters.
-- Dennis
