China's Elite Unfazed by Yuan Talk
Disputes over China's currency may be sparking protectionist sentiments in Washington. But Wong Kwong Yu, one of China's wealthiest entrepreneurs, isn't losing sleep over the matter.
Wong, the 35-year-old founder of GOME Group -- often called the Wal-Mart of China -- doesn't think his fast-growing electronics empire will be hurt if China gives in to global pressure to revalue its currency, the yuan.
That's because the billionaire operates in the Chinese economy, selling locally produced versions of foreign-brand televisions, cellphones and other products. He might even come out ahead, because 20% of the components in the products he sells are imported and would be cheaper if the yuan gets stronger.
However, Wong, who opened his first store in 1987 in his late teens and has built an empire of 330 stores in 80 cities across China, echoed his government's complaint that the mounting U.S. pressure to revalue the Chinese currency could backfire, if the tensions escalate into a larger trade dispute.
"For the U.S. to try and influence [China] isn't healthy for the U.S. or China," said Wong, who is the richest or the second-richest man in China, depending on whether one believes Euromoney or Forbes magazine. "Of course, it seems like the U.S. always enjoys telling others what is the right thing to do."
Wong's views were echoed by other Chinese entrepreneurs who attended a business seminar in Los Angeles this week sponsored by the Asia Society. Their comments reflect the frustration of Chinese business and government leaders about the global pressures to revalue the currency, which is pegged at about 8.3 yuan to the U.S. dollar.
China's competitors contend that the yuan is undervalued by as much as 40%, making Chinese exports cheaper in foreign markets and giving the country an unfair trade advantage.
Leaders in Beijing, who have accumulated massive foreign reserves trying to prop up the yuan, acknowledge that they need to move toward a more flexible currency. But, they say, they need to strengthen their financial system before making that move or they will risk destabilizing their economy.
China's exchange-rate system is expected to be on the agenda this weekend when the finance ministers from the Group of 8 leading industrialized nations meet in London.
