take your hot money to china

Subject: China questions dollar slide
At the time, many hailed Beijing's decision to keep the yuan unchanged, providing a rare oasis of relative strength and certainty while all around the region one currency after another collapsed.

Now US exporters complain that the yuan, pegged at about 8.3 to the dollar since 1994, is undervalued and gives China an unfair advantage by making Chinese exports cheaper.


Chinese analysts estimate that this kind of speculation has allowed up to 30 billion dollars of "hot money" to enter across China's borders as investors hope for a revaluation of the currency.

Their gamble is that China's central bank will revalue the yuan, giving them an immediate overnight profit.

Chinese President Hu Jintao said during a meeting with US leader George W. Bush in Chile a week ago that Beijing planned to loosen the yuan's peg -- but only under the right conditions.

"We will continue to push forward the reform on the yuan exchange rate, while maintaining overall stability in our economy," Hu was quoted as telling Bush ahead of the Asia-Pacific Economic Cooperation forum talks.

He indicated that China would seek to prevent wild fluctuations in the yuan exchange rate if and when the peg was loosened.

(Nancy Nov. 30)
Reporter: Nancy