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 | HONG KONG: RETURNING TO THE FOLD January 10, 1997 |
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Return to the Hong Kong forum's top page.
Questions asked
in this forum:
What will happen to religious freedom in Hong Kong after the transfer ? Are the restrictions on China enforceable? What will life be like in Hong Kong in the year 2000? What's the prognosis for the future of the independent media in Hong Kong? How will the recording of economic data change? Will China phase out the HK dollar and replace it with the Yuan? Has China made any specific commitment to hold free elections to parliament after the transition? What will the U.N. do if it refuses? Viewer comments Stefan Osborne of Novosibirsk, Russia, asks: I taught an international finance class here in Siberia last semester, where we learned that Hong Kong is one of the major players on the international currency market, and it would be foolish for China to restrict this profitable market. What do you think China's attitude towards the Eurocurrency market is?
Dr. DeGolyer reponds:
Well, being in Russia you of all people should know that governments don't always (or even regularly) act rationally, especially when it comes to the economy. China is no different from any other country, and since its degree of development is far behind Hong Kong's, the rulers in Bejiing do not have the instinctive reactions those in Hong Kong do. While you and I might agree it would be foolish to restrict the currency market, that doesn't mean it won't, and in fact, it does in China though the government is moving toward a fully convertible currency.
I'm not quite sure about the question regarding the eurocurrency market and "China's attitude." If you mean currency traders in China, it's the same as anywhere else; if a profit can be made, make it. Unfortunately, currency trading in China is still very small and suspiciously regarded by most in the government who don't understand financial markets in general. This is also true in many countries, including the U.S. and I'm sure, Russia. Check into recent actions on derivatives in the U.S. if you want to read about some interesting non-rational behavior.
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