Article in yesterdays Financial Times is copyrighted so you can find the full text free by searching the FT archive for "China and deflation".

Article makes some very interesting statements:

1. China's deepening deflation has not responded to six previous interest rate cuts.

2. There is serious pressure to devalue the Chinese currency.

3. Retail prices continue downward down 3.5% from 1998.

4. Chinese people's motivation for increased savings and reduced purchasing is due to popular anxiety over the future.

Remember, one of Bruce Websters' wild cards for Y2K severity is the Chinese economy. A Chinese devaluation would hit other marginal industrial countries making it more difficult to sell goods for trade. This could be "Round Two" of the Asian Flu crisis coming at a time where its impact could do more damage to banks and trade around the world with or without Y2K. It could only make Y2K's impact more severe.

-- Bill P (porterwn@one.net), June 11, 1999

Answers

Sorry, the link did not post when I typed it:

Financial Times

-- Bill P (porterwn@one.net), June 11, 1999.

I'm not going to explain what it is, but as of about a month ago, The Economist magazine's Big Mac index (based on purchasing power parity theory) suggested that the value of China's currency is appropriate.

-- nothere nothere (nothere@nothere.com), June 11, 1999.

I always used the "price of a beer" index. Much more universally usable than the Big Mac index. 'Cause after all, there are some uncivilized places in this world where there is no Micky D's, but Uncle Sam has an outpost there.

WW

-- Wildweasel (vtmldm@epix.net), June 11, 1999.