China Urges Japan on FTA Talks

[FG Lurker]

China Urges Japan on FTA Talks
Forbes.com, May 18, 2005

Visiting Chinese Vice Premier Wu Yi on Wednesday urged Japan to start negotiations soon with China on a bilateral free trade agreement, the Kyodo news agency reported.

Wu said a free trade agreement talks would help strengthen economic cooperation between the two countries, whose ties have been strained in recent months.

(Full Story)

Hmm, free trade with a country that is (essentially) manipulating their currency to keep their selling prices low. Seems like a great idea to me!

Note to China: Float your currency if you want free trade.

[Socratesabroad]

Hmm, free trade with a country that is (essentially) manipulating their currency to keep their selling prices low. Seems like a great idea to me!

Note to China: Float your currency if you want free trade.

Of course 'free' means foreign currency coming in but no RMB going out. I felt the brunt of Chinese currency restrictions firsthand when trying to change RMB (seeing as how I live in China) into foreign currency. For starters, only the Bank of China and foreign banks (i.e. HK-based) can (or will) change anything over a couple thousand $US. Second, there are laughable restrictions on who can change currency and what visa they must hold, where and how long they can reside, etc. And these are just the hassles for laowai (FG) - the hoops regular Chinese have to go through are worse.

And another thing to remember about that 'free trade' - major cities have pricing authorities that set and maintain prices for items in all major stores (excluding the mom-and-pop places). So 'mega' stores like Carrefour have prices no better than Mai Wang's Appliances and Such or any other retail store.

On second thought, maybe falsely inflated prices are common to China and Japan...

[devicenull]

Hmm, free trade with a country that is (essentially) manipulating their currency to keep their selling prices low. Seems like a great idea to me!

Note to China: Float your currency if you want free trade.

Of course 'free' means foreign currency coming in but no RMB going out. I felt the brunt of Chinese currency restrictions firsthand when trying to change RMB (seeing as how I live in China) into foreign currency. For starters, only the Bank of China and foreign banks (i.e. HK-based) can (or will) change anything over a couple thousand $US. Second, there are laughable restrictions on who can change currency and what visa they must hold, where and how long they can reside, etc. And these are just the hassles for laowai (FG) - the hoops regular Chinese have to go through are worse.

And another thing to remember about that 'free trade' - major cities have pricing authorities that set and maintain prices for items in all major stores (excluding the mom-and-pop places). So 'mega' stores like Carrefour have prices no better than Mai Wang's Appliances and Such or any other retail store.

On second thought, maybe falsely inflated prices are common to China and Japan...

Changing money back can be a bitch, I agree on that. Easy way out is open a chinese account with an international card, then draw it out whereever you are.

Don't buy shit from the stores? They are all horrible ripoffs, gotta bargain

[Socratesabroad]

Easy way out is open a chinese account with an international card, then draw it out whereever you are.

I'm working on that. Going through the exchange hassle, I was encouraged to set up an account with HSBC, the only staffed foreign (i.e. non-mainland) bank branch here in Tianjin. Sadly, they aren't issuing bank cards here until next year.

[FG Lurker]

The yuan might shift; the imbalances won't
Boston Globe via International Herald Tribune, June 1, 2005

American pressure on Beijing to revalue the yuan is now dominating the news, but China is following Japan as a manifestation of a much bigger problem. Globalization is broken. As now structured, it is undermining U.S. productive capability and becoming unsustainable.

Without fundamental change in the rules of globalization, any conceivable yuan revaluation now won't have much impact on world economic imbalances. Remember that in the 1980s economists said a revaluation of the Japanese yen between 20 percent and 30 percent would balance trade. But the yen has more than doubled since then, and Japan still maintains a large trade surplus both globally and with the United States, as do all of the world's major economies.

The real problem is that globalization is a different game for many countries than it is for America. While China's peg of the yuan to the dollar is now the focus of criticism, most Asian countries have long managed their currencies to keep them weak against the dollar in order to stimulate their exports. Japan has spent over $300 billion in currency intervention in recent years to keep the dollar up and the yen and export prices down. In addition, many countries offer tax holidays, financial incentives and protected markets to attract new facilities in "strategic" industries that no one expects to move just because currencies fluctuate.

(Full Story)

[FG Lurker]

China's farmers fear currency change
Reuters, May 31, 2005

The sweet chestnuts budding on the trees in Wang Mingliang's terraced orchard could have a higher price this autumn -- and not because the 36-year-old farmer is counting on a good harvest.

China's currency, which is pegged to the dollar, is widely expected to be allowed to strengthen this year, lifting the prices of the country's goods sold overseas and undercutting their competitiveness.

It's a topic of feverish speculation for financial markets but a headache for Wang, who exports his 1,800-pound chestnut crop to Japan, where the shiny, brown nuts are popular in desserts.

"Chinese exports rely on being cheap, so if $1 is worth 7 yuan rather than 8 yuan it could affect my income," said Wang, whose village lies 56 miles from Beijing, below mountain ridges dominated by China's Great Wall.

(Full Story)

[Socratesabroad]

China says no currency change
Central bank: 'Mistakes occurred in the translation' of report that yuan would unpeg.
May 11, 2005: 9:37 AM EDT

BEIJING (Reuters) - China has not changed its currency policy, the central bank said Wednesday, after financial markets were jolted by a report in the nation's top newspaper that predicted the yuan would be revalued next week.

The People's Daily newspaper online edition said a yuan appreciation would be announced, possibly by widening the narrow band in which it is allowed to trade against the dollar.

But China's central bank, the People's Bank of China, said the report, a translation of a weekend news story, was wrong.

"There has been no policy change on the renminbi (yuan)," said a central bank spokesman. "Some mistakes occurred in the translation."

The report, coming after repeated calls from the United States and other countries for China to let the yuan appreciate, sent the dollar diving against Japan's yen. The yen, like several other Asian currencies, is often viewed as a proxy for the yuan and frequently rises when yuan speculation heats up.

BBC NEWS

The head of the Chinese central bank denies reports that Beijing is preparing to increase the value of the yuan.

[AssKissinger]

http://www.asianewsnet.net/news.php?aid=6500


A planned visit next year by Chinese leader Hu Jintao to Japan will blaze the way for deeper 'win-win' relations between the two countries, experts say.

But it will require both sides to restrain themselves and not play up historical issues, including the visits by Japanese premiers to the Yasukuni war shrine.

Specifically, this means President Hu will have to refrain from raising such issues during his visit, and Japanese Prime Minister Shinzo Abe must continue to resist any temptation to pray at the infamous shrine during his term of office.