[Viewpoint] Shaky future for the Korean won

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[Viewpoint] Shaky future for the Korean won

One of the best-selling shopping items among Taiwanese tourists in the early 1980s was leather jackets. I somehow ended up guiding a Taiwanese university student who wanted to go to the Namdaemun market street. He chose a jacket and started to bargain for a 5,000 won ($4.38) discount.

He later let in me on a tip about shopping at Namdaemun - that you start with 10 percent discount and bargain for more if the owner drags, and less if the owner turns away. The owner said no to my Taiwanese friend. But to my surprise, he later went back to the store and bargained again, and again, probably seven to eight times. The owner finally gave in and took 5,000 won off the price tag.

My Taiwanese friend said with a grin that he would have tried at least 10 times and was happy that he got the bargain quicker than expected. He then told me a joke: “Your beloved girlfriend one day dumped you for another man and married him. A Korean would get himself drunk and cause a scene at her wedding. A Japanese man would quietly sink in sorrow and bid a tearful farewell. A Chinese man would wait for his love’s daughter to grow. If that daughter marries off to another man, he would wait around for her daughter as well.”

Stoicism is in the Chinese genes - their perseverance is sometimes scary. Behind their forbearing and stolid facade is persistence, an obsessive pursuit of their goals. “Hide our blade to bide our time” has been the bedrock of Deng Xiaoping’s philosophy in shepherding his people toward modernization and economic reform. His famous 24-character maxim ends “never take the lead, but aim to do something big.”

It is the last part that Deng wanted to accentuate. Deng would have been proud to see the accomplishments of his China three decades later, and his descendents faithfully succeeded his legacy with a low-profile strategy in one hand and big accomplishment in the other. They push and duck based on who they deal with and on what conditions.

Both their passive and aggressive strategies are at full swing with the two battles the country is waging with the world’s major powerhouses right now - one with Japan over territorial disputes and the other with the United States over its currency policy.

China was all elbows over the territorial fight with Japan, which was triggered by the arrest of a Chinese trawler captain caught fishing near disputed islands claimed by both nations in the East China Sea. China pushed and pushed until Japan finally yielded by freeing the captain. But China was not content, demanding an apology and compensation.

The country poses a formidable challenge to Japan over the status of the world’s second largest economy and exposed its ambition to beat Japan to become the region’s dominant leader. Yet China is the passive and humble whiner when it comes to the currency issue.

“Although China’s gross domestic product is the third largest in the world, the per capita figure is only one-tenth of that of developed countries,” Chinese Prime Minister Wen Jiabao told world leaders at last week’s UN General Assembly. “Taken as a whole, China is still in the primary stage of socialism and remains a developing country.”

But his government slapped anti-dumping tariff charges against American chicken imports. China acts humble, saying it still has a lot to learn. But as it bides its time, it shows teeth and bites. China of course has an even bigger counterattack plan. It is planning to prolong the currency war as long as it takes - from 10 to 30 years. It’s following the action plan of turning its renminbi into just as commonly traded a currency as the Japanese yen and English pound in 10 years, standing equally with the euro and U.S. dollar in 20 years and opening a dollar-yuan bihegemony era in 30 years. It has started allowing international banks settle trade accounts in the yuan and is opening the capital market as a part of its long-term plan.

Its first goal is to eclipse the yen and become the leading Asian currency. China has been calling for financial support from Southeast Asian countries and creating a single Asian currency, likely pegged to the yuan. But we are doing little other than watching the yen topple. What will happen in 30 years after China accomplishes what it is after? We may see the yuan replace the won at Namdaemun shops. The Namdaemun shop owner later told me the Chinese always demand 10 percent off.

“If we hold them, they demand more cuts. So we usually let them go. Your friend came two to three times fewer than expected and demanded 5,000 won less than expected. I had nothing to lose.”

The Koreans are one step ahead of the Chinese. At least the shopkeeper was.
*The writer is the business news editor of the JoongAng Sunday.

By Yi Jung-jae
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