As a sign of good will, should China help Vietnam deal, with the financial crisis if it does happen? Options

[SoCal]

As a sign of good will, should China help Vietnam deal
with the financial crisis if it does happen?

Please share your constructive suggestions on this matter.
Please retrain yourself from posting profanity and lame comments. Thank you.

[MrShao]

Hi, Mr Socal:

with all due respect, ur post is 3 weeks overdue. the debate is over. China already stepped in and helped the Vietnam by giving her cash loans and special trading deal. I raised the issue at Vietnamese chat room 3 weeks ago. IMF didn't intervene. Remember i call ur reference 'rosy'. no hard feeling.

Since then, stock market all over the world plunged. High commodities prices are not going to go away pretty soon. I am constantly watching the vietnamese economy because it is the barometer of east asian economy. like before, i still worries about its cascading effects on her neighbors. in particular, vietnamese current account deficits, inflation, capital flight are everyone's top concerns (except in Viet-chat room).

beijing didn't help vietnam out of good will. it is in line with beijing's strategic interests. China doesn't want to appreciate Yuan too fast, but the pressure is building up by the inflow of hot cash - mainly dollar- from aboard. But if Viet Dong devalues too quickly, it will exacerbate beijing's position. That's to say that shorting Dong by buying dollar, and at same time using dollar to buy Yuan. the net effect is that china ends up with lots of dollars reserves and excess Yuan circulation, meaning inflation. Beijing lends the Dollar to Viet allowing Viet gov to defend Dong's value. so the cycle mentioned above will not hurt china. Very Smart move.

This post has been edited by MrShao: Jun 30 2008, 05:46 PM