For years the gold standard for foreigners working in China was getting paid in foreign currency.With a widely undervalued RMB, people wanted to earn dollars or pounds and spend the money locally. However, while the Euro is still very strong, a shifting RMB is making people think twice about asking for their money in dollars. Since China loosened the peg the Yuan has gained 7% against the dollar and the government just increased the amount that it can fluctuate per day 66% (as faithful reader TommyH pointed out). This just ahead of the trip of many of China’s top lawmakers to Washington DC. Meanwhile the US Congress also is trying to make some noise in response to the visit.
The enormous amount of foreign reserves and overall cash that government offices have in China (with no oversight so to speak) has led the country to do some interesting things. First, the government bought a large stake in the private equity firm Blackstone, and now the Financial Times has a piece on how municipal ministries are ignoring their own regulations and investing in the markets.
But what everyone really wants to know is how Jack Bauer will handle China.
The country is undergoing a lot of reform (no surprise) and it is still trying to figure out the best way to change in some areas. It has opened up the travel market to foreign agencies a few months ahead of its WTO committments. Interestingly it is trying to decide what to due about the antiquated Hukou system of registering its population and restricted geographical flows. It is still unclear what the changes would be, but based on the state-run papers here, it seems to be an issue of class divide (urban/rural).
And finally, China is trying to clamp down on the sale of endangered tigers inside its borders.
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