World Economic News
Peoples Bank of China Spends Billions on Yuan/Dollar Peg
The Peoples Bank of China has spent 1.16 trillion yuan (US$195 billion) buying foreign currency in 2004 to hold the yuan peg to the U.S. dollar, according to China Economic Net March 2. This is a 40% increase in spending over 2003. China has big forex inflows due to strong trade surpluses, big foreign investment, and also speculative "hot money" inflows. As a result, the PBOC had to drain 669 billion yuan from the banking system. In 2003, it had to absorb 282 billion yuan from the system. The PBOC has become the only buyer of surplus foreign exchange in the Chinese market.
Last year, turnover on the China Foreign Exchange Trade System, which trades U.S. dollars, yen, euros, and Hong Kong dollars against the yuan, rose 38%, to a record US$209.04 billion. Also, China's forex reserves hit a record US$610 billion at the end of 2004, up US$206.7 billion from 2003. Now, more foreign exchange will be allowed out of the country.
Britain Studies Maglev Technology for North-South Rail
British press reported at the end of February that rail-industry leaders are calling for magnetic levitation technology (maglev) to be considered for the North-South rail line which would link London and Scotland. Rail industry leaders are calling for the maglev to be considered for the north-south line, because this technology could put Britain ahead of the rest of Europe, the Scotsman reported Feb. 18.
British Transport Secretary Alistair Darling has announced that plans for the new north-south link, are back on the agenda, and maglev is one technology under consideration. Chancellor Gordon Brown travelled on the maglev when he was in Shanghai at the end of February, and reportedly likes the technology, and Tony Blair wrote a Cumbria Member of Parliament that, "We are ready to look at the potential of maglev along with more conventional high-speed rail technologies."
The UK Ultraspeed project said a 500-mile line could be built over ten years to link London and Glasgow via Birmingham, Manchester, Newcastle, and Edinburgh. Ultraspeed project head Dr. Alan James has made a presentation on the technology to Tony Blair. Also, Moir Lockhead, CEO of Aberdeen-based FirstGroup, after visiting Shanghai, which has the world's only commercial maglev, said in January: "The UK does not have a European-style high-speed network, and so is in an almost unique position to leapfrog ahead. We are well placed to look 20-30 years ahead and ask 'Is this the technology for us?' "