Banking is difficult during the National Holiday
in China. For seven days, everybody is on vacation – everybody. Cooks and old
bearded cardboard collectors still do their routines, but their relatives are
coming through from afar and filling the apartment up with shouts and covering
the floor with sunflower seeds.
All accountants are in Yunnan.
Sending currency out of China requires a team of accountants or documents or both. For most people in China, this isn't a big problem. Being of the minority, I found myself unfortunately in need of an accountant.
Reaching into the expat pool for help, my friend's visiting father informed
me that the exchange rate
had suddenly been adjusted and was now 7.5RMB:1USD. I tried to grasp what that
I spat out that such a development changes the face of the planet and right now countless extremely rich and powerful people are jumping out of their beds and making phone calls – it was silent but for the car horns as I fumbled for my cell phone.
We all laughed about it later (note: the exchange rate was not adjusted).
As ridiculously gullible as I am, China utilizing the seven-day holiday to
implement a national policy that affects the entire world seemed plausible –
not necessarily the emancipation of the RMB from the dollar (or vice versa),
but mass directives that are adhered to by the majority of the Provincial officials.
The Chinese Communist Party has demonstrated this very ability on numerous occasions
throughout its history.
Ironically, as quickly as economic rules change in China, the policy remains
steadfastly cautious and incremental. Demands for more reform from palace liberals
and retired officials are met with concessions to favored industries and a wall
of complex relationships – this struggle takes the form of intense debate and
concentrated haggling, but the overriding policy calls for eventual decisions
on thorny issues such as currency reform.
Traders, beware of auspicious dates.
Absurd? MOFCOM discusses the
situation in an article entitled, "Currency reform may happen quicker than
it takes for you to cover your ears after lightning strikes." (Chinese
Rumors flew around tonight that French President Jacques Chirac's China trip
included a stop in Chengdu's People's Avenue and a night at the Wanda Sofitel
Hotel. It's a fact that the Germans are converging on the Kempinsky Hotel next
week to celebrate the new Konsulat here – with Bank of China officials chatting
with their counterparts in the U.S. right now, who knows what might be agreed
upon concerning the RMB and trade volume?
A case in point might be China's laws concerning import-export companies, both domestic and foreign. Previous laws laid severe limitations on the type and number of companies with import-export licenses. Requirements included at least $5 million in assets (cash), a steady verifiable stream of goods and lots of friends.
Manufacturers, of course, don't have to deal with this, but Trader Joe does.
Now, the laws have been relaxed substantially – virtually anybody can get a
license now. According to an official at the Chengdu Hi-Tech Zone, it's just
a matter of waiting two months for everybody's computer to be brought up to
A colleague advises caution and patience – "Many people are focusing on
this situation right now, and there is a lot of confusion as the new laws replace
the old ones." And are placed within the context of reality.
If Beijing states that WTO commitments require import-export restrictions to
be relaxed, it will happen. But Sichuan is far from the center – a lot of document-sifting
and computer-restructuring will take place before Sichuan traders can start
selling Tibetan furniture to Canadians.
Two whole months worth …