Peking stands firm behind HK dollar peg
Saturday 17 January 1998
The blunt public pronouncements were aimed both at international financiers and opinion at home, where the Asian financial turmoil has caused a slide in the black market value of the renminbi. Dai Xianglong, governor of the People's Bank of China, made the most forthright pledge yet that the Chinese government would not devalue its currency in response to the Asian financial meltdown. A renminbi devaluation was "out of the question. "We don't have a reason to devalue, nor are we willing to devalue", he said.
The commitment comes ahead of today's arrival in Peking of Michel Camdessus, managing director of the International Monetary Fund, whose bail-out programmes for other Asian countries would be undermined by any Chinese depreciation. Repeated promises by Peking have failed to quell fears that China may decide to devalue its currency because of rising competition for its exports from south-east Asian countries. Mr Dai said that only 15 per cent of China's exports were vulnerable to competition from south-east Asian countries.
Rumours of a renminbi devaluation puts yet more pressure on the Hong Kong dollar peg to the US currency, which Peking is committed to maintaining. Mr Dai stressed that China's economy was robust. Economic growth will slow this year, he confirmed, but he was confident it would still reach 8 per cent, compared with 8.8 per cent in 1997. And the cause of the cooling was a slowdown in township and village enterprises, previously one of the engines of China's economic growth. The central banker promised "very drastic measures" to restructure China's state banks, confirming that up to 25 per cent of domestic loans were non-performing, of which more than 5 per cent were non-recoverable.
Meanwhile, in Hong Kong the Hang Seng Index rose almost 4 per cent as fears of a default at Sino Group, the property developer, receded. Concern over the property giants was exacerbated by a decision by Moody's, the credit ratings agency, to downgrade British-controlled Swire Group, and Wharf. The pair saw their share price rise, probably reflecting the recent criticism of credit agencies for failing to predict the crisis.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 Watch: Man takes selfie every mile of 2,600 mile hike, creates amazing timelapse video
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Revealed: Putin's army of pro-Kremlin bloggers
Germanwings plane crash: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
Andreas Lubitz: Knee-jerk reaction to 9/11 enabled mass murder
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...