China Unveils its Currency Basket to Manage its Currency
08-10: China took greater steps toward transparency in its currency regime on Wednesday when it laid bare the structure of its recently imposed currency basket. China has announced that it no longer follows a total dollar peg, but has arranged the Chinese currency, the yuan, around a basket of currencies.
The dollar, yen, euro, and South Korean wan comprise the majority of the basket at an estimated 59% of the total. The Central Bank governor Zhou Xiaochuan also stated that the currencies of Singapore, Britain, Malaysia, Russia, Australia, Canada and Thailand would be considered in determining the yuan’s exchange rate.
The announcement clarified much of the guesswork that was taking place in the international swap markets. It also relieved fears that the yuan would remain pegged to the dollar, while also assuring investors that the yuan would move in tandem with the rest of Asia, given the prevalence of Asian currencies in the basket. Moreover, the move towards a basket was welcomed by the US, which plans to reopen trade negotiations on the longstanding textile dispute next week.
| Tighter Relations with Tehran: China and Iran Form New Linkages on Security, Tourism, and Trade|
08-10: China announced today that it would oppose any consideration of Iran’s nuclear program by the United Nation’s Security Council. China argued that any consideration of Iran’s program should be taken up by the International Atomic Energy Agency (IAEA) in Vienna. On Wednesday, Iran broke UN seals on atomic energy plant, escalating fears that Iran could use fissile material to produce nuclear weapons. But the IAEA cannot place sanctions on Iran—the Security Council can.
China’s support for Iran comes after last week’s official talks on a possible WTO accession by Tehran and on developing tourism between the two countries. Iran hopes Chinese tourists will travel there as historical site, given the nation’s history as part of the famous Silk Road, which once brought goods overland from China to Europe. At this time, the two nations seem more than ever eager to develop solid ties. Recently, a major Chinese oil company, CNOOC, failed with its bid to acquire the US oil company, Unocal. In light of such unforeseen challenges in dealing with the US, it seems likely that China will see a greater need to forge links with regimes avoided by the US and Europe, such as those in Iran and the Sudan.
| US Officials Criticize the World Bank’s Lending to China|
08-08: US politicians have attacked the World Bank for its billion dollar development loans to China. The loans make up 4.5% of its annual budget. Congressmen have argued that the loan is unnecessary. Congressman Duncan Hunter has argued that the loans aimed for fighting poverty are merely freeing up resources for military spending.
The World Bank has countered by stating that China remains a developing country, with the interior being particularly poor, and additionally, the Bank is not giving China grants, but interest-bearing loans that upon repayment are used to finance loans to other needy countries.
| China Formally Arrests Hong Kong Reporter on Espionage Charges|
08-05: On Friday, China formally arrested Hong Kong reporter Ching Cheong on charges of Espionage for Taiwan against the Mainland. Ching Cheong has been detained since last April.
The Xinhua news agency reported that Ching was endangering national security. It reported that Ching had received funds from Taiwan to buy intelligence on China’s security between 2000 and 2005. It claimed that Ching passed on “top secret” documents to Taiwan’s National Security Bureau which gave Ching the alias Chen Yuan-chun.
The arrest was the first for espionage since Hong Kong was handed over to China in 1997. Ching’s wife Mary Lau stated that they were seeking legal remedies. She reported that her husband had collaborated with an academic at a government think-tank, but remained steadfast in arguing that her husband was innocent and had been set up.
Ching’s detention provoked widespread criticism from journalist groups around the globe, as well as drawing reproof from the United States. All argued that Ching should not be detained until the police could present a substantiated claim of a crime.
Archive of Past News Summaries