Article Reviews

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Article Reviews

China Briefing, a news website in China reports on a circular issued by The State Administration of Foreign Exchange (SAFE) on January 24, 2014 aimed at improving and easing administration control on foreign exchange items. The article titled China Further Eases Foreign Exchange Control over Capital Accounts, says that the circular will become effective on February 10, 2014. The author indicates the changes suggested by the circular, which include simplification of profit repatriation procedure, unlimited amount of profits that can be send back to home countries by foreign companies and allows Chinese companies to lend money to their overseas affiliates. The article further comments about one of the implications to the financial leasing companies. They will be in a position to lend finances directly to local institutions, which was not possible before. This article does not offer any critics about the circular it talks about. Rather, it just reports the main points suggested by the circular.

In another article by China Briefing titled China’s MOFCOM Denies Having Approved 12 New Regional Free Trade Zones, the author reports on allegations aired by another news channel. The news channel, Economic Information Daily (EID) had alleged that MOFCOM had already approved 12 Free Trade Zones (FTZs). However, it turns out that the news was not true according to MOFCOM that denied of the 12 FTZs. The author comments in the final statement that even though it has not happened, it will be just a matter of time before the FTZs are approved. This article reports on allegations aired by another news channel without criticizing it. However, to prove that these allegations were not true the article cites at the final paragraph that an inquiry was conducted to confirm that these were just allegations.

Tom Holland in the article Continued Yuan Appreciation is no Longer such a Sure Thing explores the possibility of the Chinese currency depreciating in the future despite predictions of its continued growth. He suggests that although the recent history has proven its growth over the years, there are signs of its overvaluation that could lead to its fall in future. To prove his suggestion, he refers to previous trends of the Chinese currency such as 1993 when it was devalued. He compares its value over the last 20 years to other currencies such as the United States dollar and Japanese yen. His suggestions are based on evidence and extrapolation of the trend, as well as current uncertainties. In addition, Holland utilized graphical representation to compare the currencies of different countries, making the article more compelling. He cites that the Yuan will continue to strengthen based on the trend it has established over the last two decades. However, this might reach a point where it can grow no more.

Tomasz Janowaski in Analysis: Asian Governments to Central Banks: it’s our Mess, you Fix It explores how the governments in Asian countries have contributed very little towards strengthening their economies. He cites how the governments failed to open up barriers to domestic and foreign trade investment and lack of improving financial infrastructure at the right time. This resulted in economic difficulties, which these governments expect the central banks to take care of. To put his point across, he provides examples of several countries such as India and Indonesia that failed to reform their economic policies during a time when easy cash was available. After recession, it has decreased, putting the emerging market at the back again. The central banks are left with the task of sorting out a mess that was created by failure of governments. For evidence, the author uses quotes from leaders and specialists in economics.