How To Avoid Panic In Hong Kong
Hong Kong's financial mandarins know that their real problem in preserving the Hong Kong dollar isn't speculators such as George Soros. It's China. With $60 billion in foreign reserves, no net government debt, and a stellar record of economic performance, the Hong Kong Monetary Authority has enough firepower to fight off most currency speculators. But if the Hong Kong people decide in the months before or after July, 1997, when Beijing takes over, that they don't want to hold Hong Kong dollars, there are few ways to force them. With no capital or currency controls, it only takes a telephone call to shift Hong Kong money into safe currencies. A capital flight of this kind would be nearly impossible to stop.
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