Despite Prime Minister Zhu's denial that devaluation was a current option, some foreign analysts believe it could provide a neat solution for the government. Chinese exports have been looking expensive since the Tiger countries devalued their currencies last year. While there is no immediate need for alarm, China needs to be monitored continuously, and international creditors of China should check their outstanding positions. Several economies in South East Asia have come under strain, Russia had an effective bankruptcy and Brazil's currency, the real, has suffered a substantial devaluation. Brazil's economy was just going through a periodic downturn, and now ought to be on the way back up again.
Appearances deceive, regrettably enough.
It is true that none of the former Asian Tiger countries have been utterly destroyed by currency devaluations, but just take a look at Indonesia, as one small example. Weakened from within by devaluation of the rupiah, the Indonesian government is struggling to keep control over its diverse possessions of land. The spectre of Indonesia falling apart is very real. The Asian Tiger economies will surely pull themselves together again in the shortest possible time. Even so, that is not of much help to an exporter in the West, waiting for payment on orders already delivered.