Well, my friend, whatever Chinese companies are doing out there is worth nothing over here, because you don't get anything from their activities and they don't care what you think.
Thanks for reply (with apologies i don't know how to quote the boxes like you did). Also it's good to have a discussion with you to understand what you think. I think all the writers here will realise that at the end of the day PRC citizens will make their point and we can make our points. Sometimes it's good because no one knows what their point is. We can have a good conversation because Indian people actually what to know whats going on in PRC. Also please don't take everything personally and try to reply with reasoning. Its good to have a healthy debate.
Re. So, you mean that PRC was not legitimated before 1997?
I would say that yes PRC is more legitimate compared to before 1997. My sense is that PRC before 1997 is not the same as compared to 2013. Whats the difference. The answer is USD and HKD (basically USD because of HKD) as well as its role in PRC stability and legitimacy. The PRC leaders legitimacy is not that they have a beautiful building in Beijing. It is the fact that the beautiful building can be shown to the outsider. (Just do a google search of North Korea capital and my point might hit you – its beautiful but whats the point). And this is huge difference because it has allowed PRC citizens and government to expand its reach much before what it was before 1997. Probably because before 1997 the PRC did not have the guts to handle Hong Kong like they are doing now.
Re. How about: there is too much restriction on foreign invsters in Shanghai stock market. So if any Chinese company want to attract foreign money, it can only get in overseas market!
I ask you a question. Say you are rich in PRC. If not say you have a rich boss (basically connected enough to trade into hong kong). In fact if you have a boss asks him if he has been to hong kong (without the tour package) what he did. You - he will use RMB and buy a property in Hong Kong and not in Shanghai. Why. (Try to ignore the analysis of what the RMB would do after it enters hong kong – basically be recycled). The average citizen in PRC might buy a flat in their own city if not Shanghai. We can also use the analogy of trading. There are PRC people that trade in Hang Seng. There are PRC companies that list on the Hang Seng.
Now say there is a market crash and the property in Shanghai is worth (2 million RMB you had bought it at 10 million RMB). The hong kong property with the rich guy is worth (2 million HKD (approx. 250K USD – because of the HKD peg) originally bought it at 10 million HKD. Ask yourself why the rich and political class are buying into Hong Kong and not locally. Its for legitimacy. Its worth something. Its what the North Koreans cannot do. I have heard some friends say that it is also an insurance for the political class in case the potty (sh*t) hits the fan. They have also said Hong Kongs risk profile is increasing day by day due to PRC investments (more on that later).
Re. First, Hong Kong's currency is pegged to USD$ long before 1997, so it is not PRC's decision, it is Hongkong's own decision.
Second, it matters to Chinese gov. Since it is the owner of this China mobile, any depreciation of its share value, no matter it is traded in Hongkong or New York, it matters to its owner.
You forget that the HKD peg to the USD before 1997 was with the British in charge. Any attack on the HKD peg would have no consequence to Britain before 1997 (in fact even now). After 1997 the HKD peg to the USD is technical jargon but in totality there will be huge consequence to Hong Kong people and also PRC if it is stretched (attacked). Stretched in the sense people will figure out whats really going on in the PRC and as you agree there is a huge PRC fingerprint in Hong Kong especially the Hang Seng, Banking System and Property market. Hong Kong is the condom the PRC has used on the world after 1997. Do you know how easy it is to open an office in hong kong. Also do you know how easy is it is to close an office in hong kong. Replace the word "office" with anything related to economic activity. And I am not talking about PRC here I am talking with reference to other entities and international players.
Also with reference to China Mobile you will be surprised how low the value in USD (HKD) would be acceptable to the owners. Its playing out in front of your eyes as we speak. Replace China Mobile with other listed companies.
Re. Well, if you already start to compare Nazi economy with PRC's, then my friend, you should drop you analysis, it is really beyond your knowledge.
I agree it is probably not much out there because no one knows whats really going on in PRC. But you have said the RMB is not an international currency at this moment also no one knows where the currency is printed and how much is printed. Also why don't you and your fellow citizens compare the financial wizardry implemented in Nazi Germany, which saw the country being transformed from a basketcase in 1933 to Europe's strongest economy by 1938, to what is happening in PRC at this moment. Also it is a fact that Nazi Germany became aggressive in its territorial disputes with its neighbours after 1933 and also targeted minorities and also had strong propaganda influence during that time over its own citizens. Probably if one looks at the bigger picture there are a lot of comparisons. But lets focus on the economic part here. Would like your analysis if you can develop one.
Re. Since 2007, RMB already appreciated more than 25%, do you take that as a free up the exchange rate?
If yes, then what happened?
If not, then how can the west force PRC to free up NOW after unsuccessful attempt in past decades?
Say I have a trade surplus of 1 USD with you before 2007. That is equivalent to 10 RMB before 2007. Your exchange rate has appreciated 25% now. That means my trade surplus with you is 25% less as you will get 6.3 RMB (whatever the rate is now) am I right. Because I only need to trade with you 1 USD not 10 RMB (I might still be holding that 1 USD). The appreciation of PRC currency would work if the country was net importer. But PRC is an export oriented economy. That means your exports are now more expensive. The appreciation helped out the PRC huge trading partners. Since RMB is not freely traded there was an automatic discount for doing "¦ nothing. What ought to have happen is the PRC ought to have gone and invested in those countries (you know imported). But that did not happen due to opposition from the local population of PRC and also your huge trading partners. And the biggest gainer was whom think about it. Because my friends tell me the cost of manufacturing has come down in PRC (in USD) after the PRC currency appreciated (that is a phenomenon that can only happen in PRC). Do you ever ask why PRC has those USD treasury bills. It's a sword not a shield.
Also why would a country be willing to give up the sweat of its hard working people that had worked so hard to achieve. For legitimacy. The USD and America relationship provides legitimacy to PRC. An update to this is the sphere of legitimacy for PRC (rebalance like they say) is moving now away from USA to South China Region (and Hong Kong is in the middle). The question my friends ask me - is the sweat of the people of the PRC worth 25% more is it 25% less compared to before. Now measure it in USD and HKD and RMB. Remember what I said - the cost of manufacturing has come down in PRC (in USD). The cost of materials has come down (in USD). Whats the price of coal, aluminium, gold, etc etc now compared to before (in USD). I admit this might be a little beyond me as I am not an economist. But would like your opinion on this.
Re. Oh, please, my friend, you need go back to school! RMB doesn't need HongKong to help its legitimacy in international trade because it has no legitimacy in international trade. It is not a international currency. HongKong is helping in management of China's foreign reserve not RMB. Chinese banks can reject any mass RMB payment from HK or any overseas companies unless there is a specific deal! So, my friend, you undstand about HK's financial role in China is WRONG!
I really hope for the well-being of Hong Kong people you are right. The question will not come from Hong Kong people it will come from the countries that have investments and involvement in Hong Kong. Because if the PRC currency does not free flow the Hong Kong currency will have to do that for you. And the Hong Kong currency is traded internationally. That's why Hong Kong will never be replaced by Shanghai.
Re. Well, my friend, whatever Chinese companies are doing out there is worth nothing over here, because you don't get anything from their activities and they don't care what you think.
That's cool. I was only saying its not fair that India plays by the rules while we watch PRC walk around with its broad chest cheating. Also it is worth noting here because in international trade when a re-balance happens there are opportunities for others.