The group, which has invested $3.2bn (pounds 1.9bn) in mainland roads, ports, housing and power plants, plans to borrow in Chinese yuan for the first time to finance new projects.
The move is a sign that corporate Hong Kong, the biggest outside investor in China, is starting to doubt Peking's repeated promises to maintain the yuan's value.
A growing minority say that China will have to devalue the yuan within 18 months to drive the economy because declines of more than 50 per cent in Asian currencies will cut into exports.
New World, with one-fifth of its assets in China, isn't taking any chances. "We want to take renminbi [China's external currency] loans as there's no foreign exchange risk," said Johnny Chiu, a spokesman for New World Infrastructure, the group's China infrastructure arm. "We won't have to worry about repayment if there was a devaluation in the yuan."
Mr Chiu declined to disclose the company's borrowing plans. In its latest venture, NWI in December signed an agreement to build a $240m (pounds 145m) toll road in central China's Chengdu city. It may need to borrow in the next six months if it finalises contracts to invest in roads and power plants in the northern Chinese provinces of Shanxi and Henan, Mr Chiu said.
The company's stated debts of about $500m in June last year, gives it debt-to-equity, ratio of about 50 per cent. All the debts are denominated in US dollars. NWI's total investment in China is about $1.1bn. A devaluation of the Chinese yuan by, say, 20 per cent would effectively cut income from NWI's China projects - which generate revenues in yuan - by the same amount because it would raise the cost of servicing foreign-currency debt.
"China will be forced to devalue the renminbi by 30 to 40 per cent within 18 months," said David Roche, president of Independent Strategy, a London- based consultant. The yuan is now valued at about 8.3 to the dollar and doesn't trade freely.
China is getting caught in the same bind that confounded governments throughout Asia the past year: maintain the currency's value or weaken it to shore up exports and risk setting off a free-fall that could rock banks and ignite inflation.
At stake is China's ability to carry out its plans to shut money-losing state-owned companies that it can't afford to subsidise. It needs to keep its economy growing to create jobs for the millions of newly unemployed.
China needs to generate real economic growth - that is, after inflation - of 11 per cent a year to keep unemployment down and maintain social stability, according to Independent Strategy. Real growth in 1998, though, will only be about 4.6 per cent. And exports will provide most of that growth.
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