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 meant.
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 version only)
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 speed.
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 …
