The Global Financial Crisis and Its Impact on China and East Asia

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1 The Global Financial Crisis and Its Impact on China and East Asia Lawrence J. Lau, Ph. D. President and Ralph and Claire Landau Professor of Economics The Chinese University of Hong Kong and Kwoh-Ting Li Professor in Economic Development, Emeritus, Stanford University KPMG Global Board Meeting Hong Kong, 9 June 29 Phone: (852) ; Fax: (852) LAWRENCELAU@CUHK.EDU.HK; WebPages:

2 Case-Shiller U.S. Home Price Index, US$- Euro Exchange Rate & the S&P 5 Index 25 2 Comparison of Case-Shiller Home Price Index, S&P 5 Index and the Exchange Rate of U.S. Dollar (2Q1=1) Case-Shiller Home Price Index USD per Euro Index S&P 5 Index Lawrence J. Lau, The Chinese University of Hong Kong 2 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Month 2Q1=1

3 U.S. Unemployment Rate Seasonally Adjusted 1. Monthly Rates of U.S. Unemployment, seasonally adjusted Lawrence J. Lau, The Chinese University of Hong Kong 3 Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Apr-95 Jul-95 Oct-95 Jan-96 Apr-96 Jul-96 Oct-96 Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Percent Month

4 Exchange Rates of Selected East Asian Economies (1/2/27=1) 17 Exchange Rate Index (1/2/27=1) of Selected Countries/Regions Japanese Yen Chinese Yuan Hong Kong Dollar Indian Rupee Indonesia Rupiah Malaysia Ringgit Philippine Peso Singapore Dollar Korean Won New Taiwan Dollar Thai Baht /2/7 1/16/7 1/3/7 2/13/7 2/27/7 3/13/7 3/27/7 4/1/7 4/24/7 5/8/7 5/22/7 6/5/7 6/19/7 7/3/7 7/17/7 7/31/7 8/14/7 8/28/7 9/11/7 9/25/7 1/9/7 1/23/7 11/6/7 11/2/7 12/4/7 12/18/7 1/1/8 1/15/8 1/29/8 2/12/8 2/26/8 3/11/8 3/25/8 4/8/8 4/22/8 5/6/8 5/2/8 6/3/8 6/17/8 7/1/8 7/15/8 7/29/8 8/12/8 8/26/8 9/9/8 9/23/8 1/7/8 1/21/8 11/4/8 11/18/8 12/2/8 12/16/8 12/3/8 1/13/9 1/27/9 2/1/9 2/24/9 3/1/9 3/24/9 4/7/9 4/21/9 Lawrence J. Lau, The Chinese University of Hong Kong 4 Day

5 Exchange Rates of Selected East Asian Economies (7/2/28=1) Japanese Yen Chinese Yuan Hong Kong Dollar Indian Rupee Indonesia Rupiah Malaysia Ringgit Philippine Peso Singapore Dollar Korean Won New Taiwan Dollar Thai Baht Exchange Rate Index (7/2/28=1) of Selected Countries/Regions /15/9 4/22/9 Lawrence J. Lau, The Chinese University of Hong Kong 5 7/2/8 7/9/8 7/16/8 7/23/8 7/3/8 8/6/8 8/13/8 8/2/8 8/27/8 9/3/8 9/1/8 9/17/8 9/24/8 1/1/8 1/8/8 1/15/8 1/22/8 1/29/8 11/5/8 11/12/8 11/19/8 11/26/8 12/3/8 12/1/8 12/17/8 12/24/8 12/31/8 1/7/9 1/14/9 1/21/9 1/28/9 2/4/9 2/11/9 2/18/9 2/25/9 3/4/9 3/11/9 3/18/9 3/25/9 4/1/9 4/8/9 Day

6 Stock Market Indexes of Selected East Asian Economies (1/2/27=1) 3 Stock Market Index (1/2/27=1) of Selected Countries/Economies China Hong Kong 25 Indonesia Korea Malaysia Philippines Singapore Taiwan 2 Thailand Japan India Lawrence J. Lau, The Chinese University of Hong Kong 6 1/2/7 1/16/7 1/3/7 2/13/7 2/27/7 3/13/7 3/27/7 4/1/7 4/24/7 5/8/7 5/22/7 6/5/7 6/19/7 7/3/7 7/17/7 7/31/7 8/14/7 8/28/7 9/11/7 9/25/7 1/9/7 1/23/7 11/6/7 11/2/7 12/4/7 12/18/7 1/1/8 1/15/8 1/29/8 2/12/8 2/26/8 3/11/8 3/25/8 4/8/8 4/22/8 5/6/8 5/2/8 6/3/8 6/17/8 7/1/8 7/15/8 7/29/8 8/12/8 8/26/8 9/9/8 9/23/8 1/7/8 1/21/8 11/4/8 11/18/8 12/2/8 12/16/8 12/3/8 1/13/9 1/27/9 2/1/9 2/24/9 3/1/9 3/24/9 4/7/9 4/21/9 Day

7 Stock Market Indexes of Selected East Asian Economies (7/2/28=1) 13 Stock Market Index (7/2/28=1) of Selected Countries/Economies China Hong Kong Indonesia Korea Malaysia Philippines Singapore Taiwan Thailand Japan India Lawrence J. Lau, The Chinese University of Hong Kong 7 7/2/8 7/9/8 7/16/8 7/23/8 7/3/8 8/6/8 8/13/8 8/2/8 8/27/8 9/3/8 9/1/8 9/17/8 9/24/8 1/1/8 1/8/8 1/15/8 1/22/8 1/29/8 11/5/8 11/12/8 11/19/8 11/26/8 12/3/8 12/1/8 12/17/8 12/24/8 12/31/8 1/7/9 1/14/9 1/21/9 1/28/9 2/4/9 2/11/9 2/18/9 2/25/9 3/4/9 3/11/9 3/18/9 3/25/9 4/1/9 4/8/9 4/15/9 4/22/9 Day

8 Quarterly Rates of Growth of Exports of Goods: Selected East Asian Economies 5 Figure 3.2: Year-over-Year Quarterly Rates of Growth of Exports of Goods in US$ (Percent) Annualized Percent per annum Q Q Q Q Q Q Q Q Q Q Q Q Q1 2 Q2 2 Q3 2 Q4 2 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Q3 25 Q4 25 Q1 26 Q2 26 Q3 26 Q4 26 Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Q2 28 Q3 28 Q4 28 Q Lawrence J. Lau, The Chinese University of Hong Kong 8 Quarter China,P.R.:Hong Kong India Indonesia Korea Malaysia Philippines Singapore Thailand China,P.R.: Mainland Japan Taiwan Prov.of China

9 Quarterly Rates of Growth of Imports of Goods: Selected East Asian Economies 8 Figure 3.3: Year-over-Year Quarterly Rates of Growth of Imports of Goods in US$ (Percent) Annualized Percent per annum Q Q Q Q Q Q Q Q Q Q Q Q Q1 2 Q2 2 Q3 2 Q4 2 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Q3 25 Q4 25 Q1 26 Q2 26 Q3 26 Q4 26 Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Q2 28 Q3 28 Q4 28 Q Lawrence J. Lau, The Chinese University of Hong Kong 9 Quarter China,P.R.:Hong Kong India Indonesia Korea Malaysia Philippines Singapore Thailand China,P.R.: Mainland Japan Taiwan Prov.of China

10 Quarterly Rates of Growth of Real GDP, Y-o-Y: Selected East Asian Economies 2 Figure 3.1: Quarterly Rates of Growth of Real GDP, Year-over-Year, Selected East Asian Economies Annualized Rates in Percent Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1 2 Q2 2 Q3 2 Q4 2 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Q3 25 Q4 25 Q1 26 Q2 26 Q3 26 Q4 26 Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 Q2 28 Q3 28 Q4 28 Q China,P.R.:Hong Kong India Indonesia Korea Malaysia Philippines Singapore Thailand China,P.R.: Mainland Japan Taiwan Prov.of China Lawrence J. Lau, The Chinese University of Hong Kong 1-2 Quarter

11 East Asian Share of World GDP, 196-present 26 East Asian Share of World GDP, 196-present Lawrence J. Lau, The Chinese University of Hong Kong 11 Year Percent

12 Savings Rates of Selected Asian Economies ( ) 6 5 China, Mainland Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Taiwan Thailand Savings Rates of Selected Asian Economies Lawrence J. Lau, The Chinese University of Hong Kong Year Percent

13 Savings Rates of Selected Asian Economies (198-28) China, Mainland India Japan Malaysia Singapore Thailand Savings Rates of Selected Asian Economies Hong Kong Indonesia Korea Philippines Taiwan Percent Lawrence J. Lau, The Chinese University of Hong Kong Year

14 The Rising Ratio of East Asian Trade in Total World Trade, 196-present 3 East Asian Share of Total World Trade, 196-present Percent Share of World Exports Share of World Imports Share of Total World Trade Lawrence J. Lau, The Chinese University of Hong Kong 14 Year

15 The Share of East Asian Exports Destined for East Asia 53 The Share of East Asian Exports Destined for East Asia Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Lawrence J. Lau, The Chinese University of Hong Kong 15 Month %

16 The Share of East Asian Imports Originated from East Asia The Share of East Asian Imports Originated from East Asia Lawrence J. Lau, The Chinese University of Hong Kong 16 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Month %

17 Total Foreign Exchange Reserves minus Gold, Selected Countries and Regions 2, Total Foreign Exchange Reserves minus Gold 1,8 1,6 1,4 China, Mainland Japan Russia Africa Taiwan Prov. Of China 1,2 1, Lawrence J. Lau, The Chinese University of Hong Kong 17 M M M M M M M M M M M1 199 M7 199 M M M M M M M M M M M M M M M M M M M1 2 M7 2 M1 21 M7 21 M1 22 M7 22 M1 23 M7 23 M1 24 M7 24 M1 25 M7 25 M1 26 M7 26 M1 27 M7 27 M1 28 M7 28 M1 29 Year USD billions

18 Major Foreign Central Banks Holdings of U.S. Treasury Securities 8 Major Foreign Holders of U.S. Treasury Securities 7 6 China, Mainland Japan Russia United Kingdom Brazil Mar-9 Lawrence J. Lau, The Chinese University of Hong Kong 18 Mar- Jun- Sep- Dec- Mar-1 Jun-1 Sep-1 Dec-1 Mar-2 Jun-2 Sep-2 Dec-2 Mar-3 Jun-3 Sep-3 Dec-3 Mar-4 Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Sep-5 Dec-5 Mar-6 Jun-6 Sep-6 Dec-6 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Month USD billions

19 Real Chinese GDP in US$ Since 1952 (28 Prices) Chinese Real GDP, in 28 prices 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, Billions US$ Lawrence J. Lau, The Chinese University of Hong Kong 19 Year

20 Real Chinese GDP per Capita in US$ Since 1952 (28 Prices) 3,5 Chinese Real GDP per Capita, in 28 prices 3, 2,5 2, 1,5 1, 5 Lawrence J. Lau, The Chinese University of Hong Kong US$ Year

21 China s Share of World GDP, 196-present China's GDP as a Percentage of World GDP Lawrence J. Lau, The Chinese University of Hong Kong Percent Year

22 The Distribution of Chinese GDP by Sector The Distribution of GDP by Sector 1% 8% 6% 4% 2% % Year Lawrence J. Lau, The Chinese University of Hong Kong 22 Primary Sector Secondary Sector Tertiary Sector

23 The Distribution of Chinese Employment by Sector The Distribution of Employment by Sector 1% 8% 6% 4% 2% % Lawrence J. Lau, The Chinese Year University of Hong Kong 23 Primary Sector Secondary Sector Tertiary Sector

24 The Ratio of Chinese Trade in Total World Trade, 195-present The Ratio of Chinese Trade to World Trade The ratio of Chinese Exports to World Exports The ratio of Chinese Imports to World Imports The ratio of Chinese Total Trade to World Total Trade Lawrence J. Lau, The Chinese University of Hong Kong Month Percent

25 The Ratio of Chinese Trade in Total East Asian Trade, 1952-present 35 The Ratio of Chinese Trade to East Asian Trade The Ratio of Chinese Exports to East Asian Exports 3 The Ratio of Chinese Imports to East Asian Imports The Ratio of Chinese Total Trade to East Asian Total Trade Lawrence J. Lau, The Chinese University of Hong Kong Month Percent

26 Chinese Monthly Exports, Imports and Trade Balance, US$ 15 The Level of Exports, Imports and Trade Balance of Goods at the End of the Month, in U.S. Dollars Exports, fob Imports, cif Trade Balance Lawrence J. Lau, The Chinese University of Hong Kong 26 Jan-92 Apr-92 Jul-92 Oct-92 Jan-93 Apr-93 Jul-93 Oct-93 Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Apr-95 Jul-95 Oct-95 Jan-96 Apr-96 Jul-96 Oct-96 Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 USD billions Month

27 Case-Shiller U.S. Home Price Index and the Chinese Trade Surplus Case-Shiller Home Price Index (2Q1=1) and Chinese Trade Surplus Case-Shiller Home Price Index 4 2 Chinese Trade Surplus Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 USD billions -5 Lawrence J. Lau, The Chinese University of Hong Kong 27 Month 2Q1=

28 Growth in U.S. Mortgage Originations: from John Kiff and Paul Mills (27) Lawrence J. Lau, The Chinese University of Hong Kong 28

29 Sub-Prime and Alt-A Mortgage Loans as a Percent of Total Mortgage Loans Sub-Prime and Alt-A Mortgage Loans as a Percent of Total Mortgage Loans 35 3 Sub-Prime Alt-A 25 2 Percent Lawrence J. Lau, The Chinese University of Hong Kong Year 26 27

30 Chinese Trade Surplus and Change in Its Foreign Exchange Reserves, US$ billions 8 Chinese Trade Surplus and Change in Its Foreign Exchange Reserves 7 Trade Surplus 6 Changes in Foreign Exchange Reserves Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan- Jul- Jan-1 Jul-1 Jan-2 Jul-2 Jan-3 Jul-3 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan Lawrence J. Lau, The Chinese University of Hong Kong 3 Month USD billions

31 Chinese Trade Surplus and Change in Its Foreign Exchange Reserves, US$ billions 8 Chinese Trade Surplus and Change in Its Foreign Exchange Reserves, US$ billions Trade Surplus Changes in Foreign Exchange Reserves Jan-9 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct Lawrence J. Lau, The Chinese University of Hong Kong 31 Month USD billions

32 The Nominal and Real World Prices of Oil (28 prices) 13 Nominal and Real Price of Oil 12 Nominal Price of Oil 11 1 Real Price of Oil, in 28M1 price Lawrence J. Lau, The Chinese University of Hong Kong 32 Jan-74 Jul-74 Jan-75 Jul-75 Jan-76 Jul-76 Jan-77 Jul-77 Jan-78 Jul-78 Jan-79 Jul-79 Jan-8 Jul-8 Jan-81 Jul-81 Jan-82 Jul-82 Jan-83 Jul-83 Jan-84 Jul-84 Jan-85 Jul-85 Jan-86 Jul-86 Jan-87 Jul-87 Jan-88 Jul-88 Jan-89 Jul-89 Jan-9 Jul-9 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan- Jul- Jan-1 Jul-1 Jan-2 Jul-2 Jan-3 Jul-3 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 U.S. Dollars per Barrel Month

33 Quarterly Rates of Growth of Chinese Real GDP, Y-o-Y 25% Quarterly Rates of Growth of Real GDP (YoY) 2% GDPQ1 GDPQ2 GDPQ3 GDPQ4 15% 1% 5% % 1983q1 1983q3 1984q1 1984q3 1985q1 1985q3 1986q1 1986q3 1987q1 1987q3 1988q1 1988q3 1989q1 1989q3 199q1 199q3 1991q1 1991q3 1992q1 1992q3 1993q1 1993q3 1994q1 1994q3 1995q1 1995q3 1996q1 1996q3 1997q1 1997q3 1998q1 1998q3 1999q1 1999q3 2q1 2q3 21q1 21q3 22q1 22q3 23q1 23q3 24q1 24q3 25q1 25q3 26q1 26q3 27q1 27q3 28q1 28q3 29q1-5% Lawrence J. Lau, The Chinese University of Hong Kong 33 Quarter Percent per annum

34 Monthly Rates of Growth of Chinese Fixed Assets Investment, Y-o-Y 6 Rates of Growth of Fixed Investment since 2, Year-over-Year Lawrence J. Lau, The Chinese University of Hong Kong 34 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Month Percent

35 Monthly Rates of Growth of Chinese Real Retail Sales, Y-o-Y 25 Rates of Growth of Real Retail Sales since 2, Year-over-Year Apr-9 Lawrence J. Lau, The Chinese University of Hong Kong 35 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Percent Month

36 Quarterly Rates of Growth of Selected Chinese Provincial GDPs, Year-over-Year Quarterly Rates of Growth of Provincial GDP, Year-over-Year Percent The Weighted Average Rates of Growth The National Real Rates of Growth Tianjin Inner Mongolia Shanghai Zhejiang Guangdong Guizhou Lawrence J. Lau, The Chinese University of Hong Kong 36 28Q1 28Q2 28Q3 28Q4 29Q1 Quarter

37 Monthly Rates of Change of the Consumer Price Index (CPI), Y-o-Y 5 Monthly Rates of Change of Consumer Price Index and Its Components Since 1994, Y-o-Y CPI 4 CPI: Food CPI: Clothing 3 CPI: Transport & Telecome 2 1 Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Apr-95 Jul-95 Oct-95 Jan-96 Apr-96 Jul-96 Oct-96 Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Percent per annum Lawrence J. Lau, The Chinese University of Hong Kong 37-1

38 Chinese Foreign Exchange Reserves and the Yuan/US$ Exchange Rate The Level of Foreign Exchange Reserves and Exchange Rate (Yuan per US Dollar) at the End of the Month , 1, ,6 1,4 Foreign Reserves 1,2 Foreign Exchange Rate 1, Lawrence J. Lau, The Chinese University of Hong Kong 38 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Month Billions US$

39 The Nominal and Real Yuan/US$ Exchange Rates 9. The Nominal and Real Exchange Rates (1994 prices), Yuan/US$ The Nominal Exchange Rate, Yuan/US$ The Real Exchange Rate, Yuan/US$ Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Apr-95 Jul-95 Oct-95 Jan-96 Apr-96 Jul-96 Oct-96 Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Yuan per U.S. Dollar Lawrence J. Lau, The Chinese University of Hong Kong 39

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